-The Above Figure Shows Three Possible Average Total Cost Curves

-The above figure shows three possible average total cost curves.If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC2,each produces 40 units,and the market price of the good is $20 per unit,then

A) the firms incur an economic loss of $12 per unit.
B) firms will enter the industry and the number of firms increases.
C) the firms' ATC curves will eventually shift to become the same as ATC1.
D) firms will exit the industry and the number of firms decreases.
E) Both answers A and D are correct.

Correct Answer:

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