If There Is a Decrease in Industry Supply While the Industry

question 328

Multiple Choice

If there is a decrease in industry supply while the industry demand curve remains the same, then an individual firm in a perfectly competitive industry currently earning profits will see its profits

• A) increase.
• B) not change.
• C) decrease.
• D) impossible to determine.

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Definitions:

Government Involvement

Refers to the activities and interventions by the government in the market to regulate or support economic operations and social policies.

Wages

Wages refer to the fixed regular payment, typically calculated on a hourly, daily, or piecework basis, made by an employer to an employee.

Interest Rates

The percentage charged on borrowed money, influencing economic growth by affecting consumer spending and investment.

Equilibrium

A state in a market where supply equals demand, and there are no external forces prompting further change, leading to a stable price and quantity.