Suppose a Competitive Market Has a Horizontal Long-Run Supply Curve

question 287

Multiple Choice

Suppose a competitive market has a horizontal long-run supply curve and is in long-run equilibrium. If demand decreases, we can be certain that in the short-run,

• A)at least some firms will shut down.
• B)price will fall below marginal cost for some firms.
• C)price will fall below average total cost for some firms.
• D)at least some firms will enter the industry.

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Definitions:

Brazilian Rain Forest

The Amazon Rainforest in Brazil, which is the largest tropical rainforest in the world, known for its biodiversity.

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