Refer to the Graphs Shown, Which Depict a Perfectly Competitive

question 81

Multiple Choice

Refer to the graphs shown, which depict a perfectly competitive market and firm in a constant-cost industry. If market demand decreases from D₀ to D₁, in the long run:

• A) new firms will enter this market and the price will return to P₀.
• B) new firms will enter this market and the price will remain at P₁.
• C) some firms will exit this market and the price will return to P₀.
• D) some firms will exit this market and the price will remain at P₁.

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Definitions:

Copper Mining

The process of extracting copper from the Earth, which is a crucial resource for electrical wiring, plumbing, and various alloys.

Water Users

Individuals or groups that utilize water resources for purposes such as agriculture, industry, or domestic use.

Marginal Social Benefit

The incremental value for society resulting from the creation of an additional unit of a good or service.

Marginal Social Cost

The comprehensive expense to society for producing an extra unit of a good or service, encompassing both individual costs and external ones.