Assume in a Competitive Market That Price Is Initially Below

question 164

Multiple Choice

Assume in a competitive market that price is initially below the equilibrium level.We can predict that price will:

• A)decrease, quantity demanded will decrease, and quantity supplied will increase.
• B)decrease and quantity demanded and quantity supplied will both decrease.
• C)decrease, quantity demanded will increase, and quantity supplied will decrease.
• D)increase, quantity demanded will decrease, and quantity supplied will increase.

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Definitions:

Selling Price

The amount of money for which a product or service is sold to the customer.

Fixed Costs

Costs that do not change with the level of production or sales volume, such as rent or salaries.

Widgets

A generic term often used to refer to a fictional or unspecified product or gadget.

Nonunion Firms

Companies or organizations where the workforce is not represented by a labor union, often resulting in different working conditions compared to unionized settings.