Homework SourseAccording to the accompanying figure if the price is 5 the f
According to the accompanying figure, if the price is $5, the firm is making:
| a loss and will exit the market. |
Solution
According to the figure, if the price is $5, the firm is then making zero profits and thus the market is at long-run equilibrium. Hence the correct answer is (E). The firm is making zero profits because at P=$5, P = ATC.
