If a Competitive Price-Taking Firm Is Operating in Long-Run Equilibrium

question 215

Multiple Choice

If a competitive price-taking firm is operating in long-run equilibrium and market demand suddenly falls, the short-run result will be

• A) greater economic profit.
• B) a normal profit.
• C) lower average total cost.
• D) lower average variable cost.
• E) economic losses.

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Definitions:

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded by consumers, typically downward sloping.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price in a specified period.

Price Per Unit

The cost of a single unit of product, which can be used to compare prices among similar products.

Market Growth Rate

The increase in size or sales of a specific market over a given period, typically expressed as a percentage.