Question

A perfectly competitive industry is initially in a short-run equilibrium in which all firms are earning zero economic profits but in which firms are operating below their minimum efficient scale. All of the following statements are true as the industry and the firms make their long-run adjustments except that:____________.

A. individual firms expand their output level to their minimum efficient scale.
B. new firms enter the market, causing the industry output to expand.
C. firms begin to make adjustments along their long-run average cost curves.
D some firms leave the industry and the existing firms slowly adjust their production to reach their minimum efficient scale.

Answer 1

D some firms leave the industry and the existing firms slowly adjust their production to reach their minimum efficient scale.

Step-by-step explanation:

In a perfectly competitive industry at starting there is a short-run equilibrium in which all the firm is earning zero economic profit but these firm operated below the minimum efficient scale or we can say minimum requirement i.e lowering the average cost for the long run

By going through the options the option is correct as few firms leave the industry and other existing firms try to adjust the production in a slowly way so that they could reach their minimum efficient scale

Hence, the option d is correct