Suppose a perfectly competitive increasing-cost industry is in long-run equilibrium when market demand suddenly decreases. What happens to the industry in the long run?
a. It experiences no change from the original equilibrium
b. It experiences a higher equilibrium price and produces less output
c. It experiences a lower equilibrium price and produces less output
d. It experiences the same equilibrium price but produces more output
e. It experiences the same equilibrium price but produces less output
C
You might also like to view...
Suppose the economy has a recessionary ga
A) raise real GDP without increasing the price level. B) raise real GDP and the price level. C) raise the price level alone, but cannot increase real GDP. D) raise real GDP and decrease the price level.
The circular flow diagram shows
A) how nominal GDP is distinct from real GDP. B) how the prices of factors are determined. C) the effects of inflation in a simple economy. D) the flows between different sectors of the economy.
An inherent weakness of ________ is the absence of the profit incentive
A) government-directed credit B) government-backed deposit insurance C) private loans D) prudential supervision
Arguably the simplest voting system is:
A. instant runoff voting. B. pair-wise majority voting. C. first-past-the-post voting. D. approval voting.