Assume That a Perfectly Competitive Increasing-Cost Industry Is in Long-Run

question 32

Multiple Choice

Assume that a perfectly competitive increasing-cost industry is in long-run equilibrium when market demand suddenly increases.Which of the following statements is not correct?

• A)Existing firms will earn economic profits in the new long-run equilibrium
• B)Existing firms will increase output in the short run
• C)New firms will enter the industry in the long run
• D)Some resource suppliers to the industry will earn higher income
• E)The new long-run equilibrium price will exceed the original equilibrium price

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Definitions:

Job-based Pay Structure

A compensation system where wages are determined by the specific job or task an employee is assigned to, rather than their individual performance or seniority.

Null Hypothesis

An assumption that there is no significant difference or effect, used as the starting point for statistical testing.

Probability

A measure of the likelihood that a particular event will occur, often expressed as a number between 0 and 1.

Outcome

The result or effect of an action, situation, or event, often used in experiments to denote the dependent variable being measured.