An increase in market demand will cause an increase in industry output in the long run because
A. new firms enter the industry.
B. new firms enter the industry and all firms increase their output.
C. all firms decrease their output but more new firms enter.
D. no firms enter but the existing firms increase their output.
Answer: A
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Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
What does it mean for a person or nation to have a comparative advantage in producing a product?
What will be an ideal response?
Suppose there is some unemployment in the economy and society decides that it wants more of one good. Which of the following statements is true?
A) It will have to increase resource supplies. B) It can increase output without giving up another good by employing more resources. C) It is not possible to achieve this unless technology advances. D) It will have to give up production and consumption of some other good.
Jim recently graduated from college. His income increased dramatically;from$5000 a year to $60,000 a year. Jim decided that instead of using the bus, he would buy himself a car. This implies that
a. The car is a normal good for Jim b. The car is an inferior good for Jim c. He is equally happy between using the bus and buying a car d. None of the above