13. Firms in Competitive Markets The market for fertilizer is perfectly competitive. Firms in the market are producing o

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13. Firms in Competitive
Markets
The market for fertilizer is perfectly competitive. Firms in the
market are producing output but are currently making economic
losses.
Which of the following statements is true about the price of
fertilizer? Check all that apply.
The price of fertilizer must be less than marginal cost.
The price of fertilizer must be equal to average variable
cost.
The price of fertilizer must be less than average total
cost.
The following graphs show the cost curves faced by a typical
firm, the demand for fertilizer, and possible price and supply
curves.
FirmPrice and CostsQuantityMCATCAVCP2P1
MarketPriceQuantityDemandS2S1P2P1
If firms in the market are producing output but are currently
making economic losses,
illustrates the present situation for the
typical firm in the market, and
indicates the corresponding supply curve.
Assuming there is no change in either demand or the firm's cost
curves, which of the following statements is true about what will
happen in the long run? Check all that apply.
The total quantity supplied to the market will increase.
The price of fertilizer will increase.
Marginal cost will increase.
The quantity supplied by each firm will decrease.
Average total cost will decrease.