If a Purely Competitive Firm Is Currently Facing a Situation

Multiple Choice

If a purely competitive firm is currently facing a situation where the price of its product is lower than the average variable cost, but it believes that the market demand for its product will increase soon, then

A) the firm will produce a low level of output in the short run and leave the industry in the long run.
B) the firm will shut down in the short run and leave the industry in the long run.
C) the firm will produce a low level of output in the short run but expand its plant in the long run as demand increases.
D) the firm will shut down in the short run, but stay in the industry in the long run if it expects the product price to rise high enough soon.