The graph shows the marginal cost (MC), average total cost (ATC), and marginal revenue (MR) curves for a perfectly (or purely) competitive firm. Note that the demand (D) curve is the same as the MR curve for such a firm. Assume that the cost curves are representative of other firms in theindustry. Given the current price, this firmwill

a. earn a negative economicprofit.

b. earn zero economicprofit.

c. earn a positive economicprofit.

In the long run, this marketwill

a. experience entry of additionalfirms.

b. experience exit by somefirms.

What is going to happen to the price of thisproduct?

a. It willincrease.

b. It willdecline.

c. It will stay thesame.

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