When the Price of a Product Rises, the Increase in Quantity

question 233

Multiple Choice

When the price of a product rises, the increase in quantity supplied will generally be greater in the long run than the short run because

• A) producers maximize short-run, not long-run, profits.
• B) over time, new firms will enter the industry and old firms will expand their operations in response to the price increase.
• C) consumers are less resistant to higher prices in the long run than in the short run because they have fewer options in the long run.
• D) consumer income will expand in the long run, causing resource prices to rise, which will induce producers to increase output.

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Definitions:

Asset Purchase

A transaction where a buyer acquires specific assets and liabilities from a seller rather than buying the company's stock.

Federal Law

Laws passed by the United States Congress and signed by the President. Federal laws apply throughout the country, overriding state laws where conflicts occur.

Domestic Corporations

Companies that are incorporated (i.e., formed under the corporate laws) in and operate within the country in which they were founded.

Board of Directors

A group of individuals elected to represent shareholders and govern the affairs of a corporation.