Poinsettia growing is a perfectly competitive industry and all poinsettia growers have the same cost curves. The market price of poinsettias is $5a pot and each grower maximizes profit by producing 2,600potsa week. The average total cost of producing Poinsettias is $20a pot. Minimum average variable cost is $4 a pot and the minimum average total cost is $12a pot . In the short run, each grower does each grower incur an economic loss or make a profit? How much?
Answer with a positive number.
Because firms in the industry are ______, some firms will ______ the market in the long run. The number of poinsettia growers will ______.
A. making an economic profit; enter; increase
B. incurring an economic loss; exit; decrease
C .incurring an economic loss; enter and some firms will exit; increase or decrease depending on the relative number of entering and exiting firms
D. making an economic profit; exit and some firms will enter; decrease or increase depending on the relative number of exiting and entering firms
E. making zero economic profit; shut down and exit; decrease.