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Analyzing the behavior of given market in the long run

Following is the graphical representation of a short run situation faced by a perfectly competitive firm. Is this a good market for this firm to be in? Explain. What do you expect will happen in the long run? Explain.

See the attachment for graph.


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Please refer to the attached file for the graph.

As is clear from the given graph, current price level is less than AC for entire output range. It means that firm will make a loss if it enters into the market. However current price level is above minimum of ...

Solution Summary

Solution discusses the behavior of given market in the long run.