Explain Why a Sudden Decrease in Demand in a Competitive

question 130

Essay

Explain why a sudden decrease in demand in a competitive industry causes price to fluctuate more in the short run than in the long run, compared to the original equilibrium price.

---

Definitions:

Decision Rights

The duties that a particular individual in an organization is expected to perform.

Performance Evaluation

This involves assessing an employee's job performance using various criteria to determine the effectiveness and efficiency of their work.

Centralized Firms

Organizations that maintain decision-making authority at a central point, typically at the headquarters or the top management team.

Variable Costs

Expenses that fluctuate in direct proportion to changes in the level of production or service activity.