Assume the Watermelon Industry Is Perfectly Competitive and in Long-Run

question 351

Multiple Choice

Assume the watermelon industry is perfectly competitive and in long-run equilibrium with a market price of $10. If the demand for watermelons increases in this decreasing-cost industry, long-run equilibrium will be reestablished at a price

• A) greater than $10.
• B) less than $10.
• C) equal to $10.
• D) either greater than or less than $10, depending on the number of firms that enter the industry.

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Definitions:

Leather Jackets

Garments made from the skin of animals, primarily cows, processed and designed for wear primarily as outerwear.

Utility Function

A mathematical representation of a consumer's preference ranking for bundles of goods or services, used to predict economic behavior.

Curds

The solid parts of milk that coagulate when milk is soured or treated with enzymes, used in cheese-making.

Whey

A liquid by-product of cheese production, rich in proteins and lactose, commonly used as a dietary supplement and in various food products.