Suppose that a competitive market is initially in equilibrium. Then demand increases. If entering firms face the same costs as existing firms and sufficient resources are available for entering firms,
a. the long-run market supply curve will be upward sloping.
b. the long-run market supply curve will be perfectly elastic.
c. in the long run firms will suffer economic losses, leading them to exit the industry.
d. the number of firms will decrease, and the market will become a monopoly.
b
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A) a normal B) an inferior C) a unit elastic D) a price elastic E) a price inelastic
Which of the following is true at the output level where diminishing marginal product first set in?
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