Three firms operate under perfect competition, producing 900 units of the same product but using different production technologies. Each company’s cost structure is indicated in the table:
Company X Y Z
Total Variable Costs $2,700 $3,600 $4,500
Total Fixed Costs 2,700 1,800 900
Total Costs $5,400 $5,400 $5,400
Which of the following statements is most accurate? If the unit selling price is:
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A.
$6.00, all firms should exit the market in the long run.
B.
$4.50, all firms should continue to operate in the short run, but exit the market in the long run if these conditions are expected to persist.
C.
$3.00, Firm X should continue to operate in the short run, but Firms Y and Z should shut down production.
$6.00, all firms should exit the market in the long run.
B.
$4.50, all firms should continue to operate in the short run, but exit the market in the long run if these conditions are expected to persist.
C.
$3.00, Firm X should continue to operate in the short run, but Firms Y and Z should shut down production.
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