Suppose a Perfectly Competitive Industry Is in Long- Run Equilibrium

question 103

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) new plants employ the new technology, but existing plants continue to produce as long as they cover their fixed costs.
• B) all plants use the new technology, and market output will be higher.
• C) high- cost and low- cost firms exist side by side and market output will be higher.
• D) 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.
• E) the industry supply curve has shifted to the left and price and output are both higher.

---

Definitions:

Sympathetic Nervous System

Part of the autonomic nervous system that activates the body's rapid involuntary response to dangerous or stressful situations.

Endocrine System

A collection of glands in the body that secrete hormones directly into the bloodstream to regulate various bodily functions.

Fight or Flight

A physiological response to perceived harmful events, attacks, or threats to survival.

Cognitive Appraisal

A process by which an individual evaluates the significance of what is happening for their well-being.