Economics Questions Glendale Community College Econ 101 Winter 2022 Test 3 Question 2

If the price in the market is $3, the perfectly competitive firm depicted in the graph above:

a. immediately shuts down because it incurs less of a loss than if it were to continue to operate in the short run

b. incurs a loss and shuts down in the short run, but continues to operate in the long run

c. continues to operate in the short run, but exits the industry in the long run

d. incurs a loss but can still cover its variable costs and some of its fixed costs. Thus it continues to operate in the short run