Refer to the Graphs Shown, Which Depict a Perfectly Competitive

question 152

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:

Logarithmic Equation

An equation involving logarithms, where the variable is located within the logarithm.

Logarithm

A logarithm is the power to which a number, called the base, must be raised to produce a given number.

Fraction

A numerical quantity that is not whole, representing a part of a whole.

Inverse Function

A function that reverses the effects of another function, such that the composition of the two functions yields the identity function.