Suppose that a perfectly competitive industry is in long-run equilibrium. The price of a complement good decreases. What will happen?
A. Next period a typical firm will earn positive economic profit.
B. Next period a typical firm will increase output.
C. Eventually firms will exit the industry.
D. both a and b
E. all of the above will happen
Answer: D
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After the price of Revlon nail polish increased, Jen stopped buying Revlon nail polish and started buying a cheaper brand of nail polish instead. This is called:
A. a decrease in the seller's reservation price. B. the income effect of a price change. C. the substitution effect of a price change. D. a decrease in the buyer's reservation price.
The amount of foreign aid in proportion to developed countries' GNP has
(a) increased over time. (b) remained fairly stable over time. (c) decreased over time. (d) fluctuated widely but has shown no clear trend.
Fill in the blank: According to your text, ________ may be the most powerful force behind economic growth
A) minimum wages B) unionization C) technical innovation D) a well-motivated bureaucracy E) price compression
National income accounting fills in the dollar values in the circular flow of income
a. True b. False Indicate whether the statement is true or false