If an Industry That Experiences External Economies Is in a Long-Run

question 85

Multiple Choice

If an industry that experiences external economies is in a long-run equilibrium, then an increase in market demand causes

• A)a decrease in price in the short run, with the price returning to its former level in the long run.
• B)an increase in price in the short run, with the price returning to its former level in the long run.
• C)an increase in price in the short run, but the price falls below its former level in the long run.
• D)an increase in price in the short run, with the price rising above its former level in the long run.
• E)nothing to change in the market.

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Definitions:

Common Difference

The steady gap found between successive numbers in an arithmetic progression.

Common Ratio

In a geometric sequence, the consistent factor by which each term is multiplied to produce the next term.

Geometric Sequence

A geometric sequence is a sequence of numbers where each term after the first is found by multiplying the previous one by a fixed, non-zero number called the common ratio.

Common Ratio

In a geometric sequence, the constant factor by which each term is multiplied to get the next term.