Suppose a Perfectly Competitive Industry Is in Long- Run Equilibrium

question 56

Multiple Choice

Suppose a perfectly competitive industry is in long- run equilibrium.A new one- time cost- saving technology is then developed and new plants are built.Eventually,a new long- run equilibrium will be established where

• A)the industry supply curve has shifted to the left and price and output are both higher.
• B)new plants employ the new technology,but existing plants continue to produce as long as they cover their fixed costs.
• C)all plants use the new technology,and market output will be higher.
• D)high- cost and low- cost firms exist side by side and market output will be higher.
• E)all plants continue to operate until they are physically worn out as long as price is greater than the the firm's average variable cost.