Suppose One Firm in a Perfectly Competitive Industry Experiences an Increase

Suppose one firm in a perfectly competitive industry experiences an increase in its costs of production. Which of the following best describes the most likely long run adjustment to this situation?

A) Eventually, all firms in the industry will also experience this same increase in costs.
B) Eventually, the price of the product will increase, and consumers will pay for the increase in costs.
C) The firm in question may suffer losses and exit the industry.
D) none of the above

Correct Answer:

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