What is likely to happen in the long run if the firm whose graph is displayed be

Question

What is likely to happen in the long run if the firm whose graph is displayed below operates in perfectly competitive market A) Industry output will stay the same; individual firm output will increase B) Industry output will increase; individual firm output will increase C) Industry output will increase; individual firm output will decrease D) Industry output will decrease; individual firm output will increase 6. uC ATC Output Miranda and Jason are in the tutoring business. Miranda is willing to tutor as long as she gets $30, while Jason won't tutor unless he gets $40. If the most that someone would pay for tutor is $35, how much producer surplus is earned? a) Miranda $10; Jason--$5 b) Mirandas $5; Jason =-$5

Explanation / Answer

Ans)
C) industry output will increase, individual firm output will decrease.
The price is above the ATC which means there are profits in the short run. In the long run, more firms will enter the market.As a result, the overall output will increase but the individual output level will decrease.

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