The Motivating Force Behind an Increase in Supply in a Long-Run

question 25

Multiple Choice

The motivating force behind an increase in supply in a long-run adjustment to equilibrium is

• A) lower prices.
• B) economic profits that are present in the short run.
• C) higher profit expectations among owners of firms in the industry, triggered by increased prices.
• D) normal profits witnessed by individuals outside the industry that trigger entry.
• E) the decreases in average cost that can be obtained through economies of scale.

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Definitions:

Raw Materials

The basic substances used in production processes to create goods, often transformed or converted during the manufacturing.

Cost of Goods Available

The total cost of inventory that is available for sale during a given period.

Net Operating Income

The earnings from a company's core business operations, indicating the efficiency in managing its operational costs.

T-Accounts

A visual representation of accounts used in double-entry bookkeeping, showing debits on the left and credits on the right, to track the balance of each account.