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

question 41

Multiple Choice

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

• A)Some existing firms will produce more while some other firms will exit the market so that the market supply curve will remain the same.
• B)Existing firms will produce less and some firms will exit the market so that the market supply curve will shift to the left.
• 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:

Hormones

Chemical messengers produced by glands in the endocrine system, traveling through the bloodstream to target organs, affecting various physiological processes and behaviors.

Epithelial Cells

Cells that line the surfaces of the body, including skin, blood vessels, urinary tract, and organs, serving as a barrier and creating an interface with the environment.

Stem Cells

Undifferentiated cells with the potential to develop into many different cell types in the body, serving as a repair system for tissues.

Glands

Organs in the body that secrete hormones or other substances directly into the blood or onto a surface within or outside the body.