Suppose a Perfectly Competitive Constant-Cost Industry Is in Long-Run Equilibrium

question 223

Multiple Choice

Suppose a perfectly competitive constant-cost industry is in long-run equilibrium when market demand suddenly increases.What would probably happen to a firm in this industry in the long run?

• A)It would experience no change for the original equilibrium
• B)It would experience a higher equilibrium price
• C)It would experience a lower equilibrium price
• D)It would experience the same equilibrium price but would reduce its output
• E)It would experience higher average total costs and would reduce its output

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Definitions:

Mean

The arithmetic average of a distribution, obtained by adding the scores and then dividing by the number of scores.

Central Tendency

A statistical measure that identifies a single value as representative of an entire distribution. It aims to provide an accurate description of the entire data set.

Extremely Low Scores

Results that are significantly below the average range in assessments or evaluations.

Bar Graph

A graphical representation of data using bars of different lengths or heights to compare values across categories.