- The diagrams below show short-run cost curves for four perfectly
competitive firms. Assume that each firm faces a market price of
a. Which firms could earn positive profits at some level of
output?
b. Which firms would be incurring losses at their profit-
maximizing level of output, but will continue producing
in the short run?
c. Which firms will choose not to produce at price
9. What, if anything, does each one of the following tell you about
ease of entry into or exit from an industry?
a. Profits have been very high for two decades.
b. No new firms have entered the industry for 20 years.
c. The average age of the firms in the 40-year-old industry is
less than seven years.
p 0.p 0?