When Market Demand Increases in a Competitive Industry

question 100

Multiple Choice

When market demand increases in a competitive industry,

• A)the number of firms increases, causing short-run market supply to increase.
• B)firms become less efficient.
• C)firms' marginal cost curves shift to the right.
• D)economic profits stay at zero because of competition.
• E)market price increases, making it possible for ATC curves to shift up.

Differentiate between positive and negative externalities.

Recognize the role of government interventions, such as subsidies and taxes, in internalizing externalities.

Understand the Coase theorem and its implications for private solutions to externality problems.

Discuss various policy tools for managing pollution and environmental harm.

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Definitions:

Levator Ani

A group of muscles in the pelvis that support the pelvic organs.

Bulbospongiosus

A muscle of the perineum that acts to compress the bulb of the urethra, aiding in the expulsion of urine or semen.

Coccygeus

A small muscle located in the pelvic area, contributing to the pelvic floor's structure and involved in supporting pelvic organs.

External Anal Sphincter

Ring of striated muscular fibers surrounding the anus.