As Existing Firms Exit a Decreasing-Cost Industry

question 39

Multiple Choice

As existing firms exit a decreasing-cost industry

• A) the LRAC curve shifts down.
• B) the LRAC curve shifts up.
• C) the position of the LRAC curve doesn't change, but firms move down their LRAC curve.
• D) the position of the LRAC curve doesn't change, but firms move up their LRAC curve.

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Definitions:

Tax Rate

The tax rate is the percentage at which an individual or corporation is taxed, which can vary based on income level, type of income, or value of goods and services.

Inflation Rate

The rate of increase in prices across a broad spectrum of goods and services, resulting in reduced purchasing power.

Saving

The portion of income not spent on consumption but kept aside for future use, often in a deposit account or as an investment.

Classical Dichotomy

The conceptual distinction between real and nominal variables within the economy, implying that alterations in the money supply solely impact nominal variables.