Post Utme Uniport 2018 Economics Question 31

Practice objective / multiple choice question 31 from the 2018 Post Utme Uniport Economics examination.

Post Utme Uniport 2018 Economics Objective / Multiple Choice
Question 31 POST_UTME_UNIPORT • 2018 • ECONOMICS • objective

Consider a perfectly competitive market with a large number of firms producing a homogeneous product. If the market price falls below the average total \cost of production, what will be the likely outcome for the firms in the market?

Answer Options

A. Firms will increase production to take advantage of the lower market price.
B. Firms will decrease production to reduce losses.
Correct Answer C. Firms will exit the market as they are unable to cover their average total \cost.
D. Firms will increase prices to match the market price.
Correct Answer
C
Correct Option:
Firms will exit the market as they are unable to cover their average total \cost.

About This Question

This is Post Utme Uniport 2018 Economics Question 31. It is one of the objective questions from the 2018 Post Utme Uniport Economics examination.

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