The Following Table Gives the Average Cost of Production for Three

The following table gives the average cost of production for three different categories of firms producing the same product.

$$\begin{array} { | c | c | c | c | } \hline \begin{array} { c } \text { Type of } \\\text { firme }\end{array} & \begin{array} { c } \text { No. of } \\\text { firms }\end{array} & \begin{array} { c } \text { Awerane } \\\text { sostper } \\\text { unit }\end{array} & \begin{array} { c } \text { Equilibrium } \\\text { output }\end{array} \\\hline \hline \text { A } & 350 & \$ 3 & 10 \text { units } \\\text { B } & 400 & \$ 5 & 10 \text { units } \\\text { C } & 550 & \$ 10 & 10 \text { units } \\\hline\end{array}$$
-Refer to Table .Suppose the price of the commodity increases to $8 per unit.Which of the following situations will be observed in the market?

A) Type C firms will enter the market and drive up the price level to $10 per unit.
B) Type B firms will enter the market and drive down the price level to $6 per unit.
C) Type A firms will continue to supply the entire output earning supernormal profit.
D) Type A firms will leave the market while Type B firms will take their place.

Correct Answer:

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