In a Perfectly Competitive Market,tastes and Preferences Lead to an Increase

question 37

Multiple Choice

In a perfectly competitive market,tastes and preferences lead to an increase in the demand for the good.Holding everything else constant,this will lead to an increase in price that will result in _____ in the short run,which will in turn _____,which will _____.

• A)positive economic profits;attract new firms;reduce the price
• B)economic losses;attract new firms;reduce the price
• C)positive economic profits;lead some firms to leave the industry;further increase the price
• D)economic losses;lead some firms to leave the industry;further increase the price

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Definitions:

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Optimal Consumption Bundle

The combination of goods and services that maximizes a consumer's utility given their budget constraints.

Marginal Utility

The further benefit or pleasure derived by consuming an additional unit of a given good or service.

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The total amount of money earned or received by an individual or household over the course of a week.