A Perfectly Competitive Market Is in Equilibrium and Then Demand

question 3

Multiple Choice

A perfectly competitive market is in equilibrium and then demand decreases. The decrease in demand means the market price will ________ and eventually there will be ________.

• A) rise; entry by new firms
• B) rise; exit by existing firms
• C) fall; entry by new firms
• D) fall; exit by existing firms
• E) fall; neither entry nor exit because the market is perfectly competitive

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Definitions:

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Knowledge that is difficult to transfer to another person by writing it down or verbalizing it, often acquired through personal experience and context.

Dialectical Thinking

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