Suppose That a Competitive Market Is Initially in Long-Run Equilibrium

question 92

Multiple Choice

Suppose that a competitive market is initially in long-run equilibrium. Which of the following are the most likely results of an increase in market demand?

• A)Existing firms will produce less and some firms will exit the market so that the market supply curve will shift to the left.
• B)Some existing firms will produce more while some other firms will exit the market so that the market supply curve will remain the same.
• C)Existing firms will produce more and new firms will enter the market so that the market supply curve will shift to the right.
• D)Existing firms will produce less while new firms will enter the market so that the effect on the market supply curve is uncertain.
• E)Nothing will change in the market.

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Definitions:

Self-Fulfilling Prophecies

Self-fulfilling prophecies are predictions that, once made, influence behaviors and actions in a way that causes the prediction to come true.

Inherited Weaknesses

Genetic or hereditary vulnerabilities passed from parents to their offspring, which may predispose individuals to certain conditions or diseases.

Environmental Conditions

The various physical and biological factors that affect the survival and development of organisms.

Chronological Age

The actual age of a person measured in years from the date of birth.