Suppose that firms in an industry have identical cost structures and the industry is in long-run equilibrium. Which of the following explains how the profit motive could lead to lower market prices?
a. Firms will be motivated to find innovative ways to reduce costs at the current market price.
b. Firms will be motivated to increase their output to earn an economic profit and the resulting surplus will lead to lower prices.
c. Firms will be motivated to decrease their current price below the market price to sell more units.
d. Additional firms will continue to enter into the market, decreasing the existing market price.

Question

02-06-2024
Business

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Suppose that firms in an industry have identical cost structures and the industry is in long-run equilibrium. Which of the following explains how the profit motive could lead to lower market prices?
a. Firms will be motivated to find innovative ways to reduce costs at the current market price.
b. Firms will be motivated to increase their output to earn an economic profit and the resulting surplus will lead to lower prices.
c. Firms will be motivated to decrease their current price below the market price to sell more units.
d. Additional firms will continue to enter into the market, decreasing the existing market price.

Sagot :

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