Suppose a Perfectly Competitive Market Is in Long-Run Equilibrium with a Price

question 100

Multiple Choice

Suppose a perfectly competitive market is in long-run equilibrium with a price of $12. Then there is a permanent increase in demand. As a result, in the short run the market price ________ and in the long run the number of firms ________ and the price is ________ the price was in the short run.

• A) rises; does not change; equal to what
• B) rises; increases; lower than
• C) rises; does not change; lower than
• D) rises; increases; higher than
• E) falls; decreases; equal to what