If a Perfectly Competitive Market Is in a Short- Run

question 71

Multiple Choice

If a perfectly competitive market is in a short- run equilibrium and each firm has P > SRATC, then

• A) individual firms in the industry will increase their output.
• B) price will fall in the short run as it is too high and firms are making economic profits.
• C) the market supply curve will become less elastic.
• D) existing firms will continue to earn economic profits in the long run.
• E) new firms will enter the market because existing firms are earning economic profits.

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Definitions:

Final Drive Component

The set of gears in a vehicle that delivers power to the drive wheels, finalizing the gear reduction process.

Drive Axle

A component of a vehicle's drivetrain that transfers power from the transmission to the wheels, enabling movement.

Differential Carrier

The housing that contains the differential gear set in a vehicle, supporting and protecting the gears as they adjust wheel speed during turns.

Crown and Pinion

A gear assembly in a vehicle's differential where the pinion (a small gear) engages with the crown (a larger gear) to allow wheels to rotate at different speeds.