Question

A firm's long-run decision to enter in or exit from a market depends upon the firm's ability to manage total revenue (TR), total cost (TC), quantity produced (Q), average total cost (ATC) and price of the goods (P). Which among the following is best suited for an entrepreneur interested to enter in a market?

• A. TR < TC
• B. TR/Q < TC/Q
• C. P > ATC
• D. P < ATC

Hint:

A firm will enter a market when P > ATC, ensuring profitability

Answer 1

The Correct Option is C

A firm should enter a market when the price is greater than average total cost (P >ATC), as this ensures the firm can cover all costs and make a profit.