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 = $5000; output = 1 million units; ATC = $5300; AVC = $4750.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) Consumers will avoid this industry because firms are suffering losses.
E) There is not enough information to formulate an answer.