Suppose the Dry Cleaning Industry Is Initially in Long-Run Equilibrium

question 49

Multiple Choice

Suppose the dry cleaning industry is initially in long-run equilibrium but then experiences a sharp increase in the price of its inputs. Assuming that the industry is perfectly competitive, the increase in costs should:

• A) decrease the number of firms in the industry in the long run and raise the market price.
• B) increase the number of firms in the industry in the industry and raise the market price.
• C) decrease the number of firms in the industry in the long run and reduce the market price.
• D) increase the number of firms in the industry in the industry and reduce the market price.

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Definitions:

Biological Evolution

The process through which species of organisms undergo changes over time through genetic variation and natural selection.

Physiological Response

A natural, automatic bodily reaction to stimuli, which can include changes in heart rate, hormone levels, or muscle tension.

Behavioral Response

A behavioral response is an observable action or set of actions taken by an individual in reaction to an external or internal stimulus.

Emotional Response

The psychological reaction to a stimulus, characterized by feelings such as happiness, anger, fear, or sadness.