Suppose That a Long-Run Adjustment in a Perfectly Competitive Industry

question 136

Multiple Choice

Suppose that a long-run adjustment in a perfectly competitive industry results in decreased industry output but leaves price unchanged.Which of the following must be true?

• A)The market demand curve did not shift
• B)The market demand curve shifted left; the market supply curve shifted right
• C)The market supply curve shifted left; the market demand curve shifted right
• D)Both market supply and demand increased, but supply increased more than demand
• E)The industry is a constant-cost industry

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Definitions:

Marginal Product

The additional output that is produced by adding one more unit of a specific input, keeping all other inputs constant.

Profit Maximize

The process by which a company determines the price and output level that returns the greatest profit, taking into account costs and demand.

Wage Rate

Wage Rate represents the standard amount of compensation a worker receives for performing a specific task or job, typically expressed per hour or per unit of work completed.

Marginal Expenditure

The additional cost incurred for producing one more unit of a good or service.