Suppose a Typical Firm in a Competitive Industry Has the Following

Multiple Choice

Suppose a typical firm in a competitive industry has the following data in the short run: price = $10; output = 100 units; ATC = $8; AVC = $7.What will likely happen in the long run?

A) In the long run the industry will expand because firms are earning economic profits.
B) In the long run the industry will contract because firms are suffering losses.
C) The size of the industry will remain the same in the long run.
D) The typical firm would shut down,until the remaining firms have a higher price.
E) There is not enough information to formulate an answer.