Firms Are Making Profits in a Decreasing-Cost Industry

Multiple Choice

Firms are making profits in a decreasing-cost industry. Which of the following statements describes what will happen in the long run?

A) More firms will enter this industry, causing the industry supply schedule to shift to the right and the LRAC curve facing firms to shift down.
B) More firms will enter this industry, causing the industry supply schedule to shift to the right and the LRAC curve facing firms to shift up.
C) Firms will exit this industry, causing the industry supply schedule to shift to the right and the LRAC curve to shift down.
D) Firms will exit this industry, causing the industry supply schedule to shift to the left and the LRAC curve to shift down.