Figure: Supply and Demand the Figure Depicts a Constant

question 47

Multiple Choice

Figure: Supply and Demand The figure depicts a constant cost industry. What happens if there is an increase in demand?

• A) The price of the product stays at $10, although there may be a temporary shortage in the short run.
• B) The price initially increases above $10 in the short run, but the entry of new firms and expansion of existing firms will push the long run price back down to $10.
• C) The price initially increases above $10 in the short run, but the increased demand for resources will drive the long run price up even higher.
• D) The price of the product stays at $10 in the short run, and then decreases as new firms enter the industry.

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Definitions:

Nonprofit Corporation

An organization that operates for a charitable, educational, cultural, or social purpose rather than for profit.

Members

Individuals who are part of a group, organization, or body, often with certain rights and responsibilities.

Promoter

A person or entity that initiates the establishment of a company by finding investors, preparing contracts, and registering the business.

Reimburse

To reimburse is to pay back or compensate someone for expenses they have incurred.