When Production Costs Change in a Perfectly Competitive Industry, Price

question 123

Multiple Choice

When production costs change in a perfectly competitive industry, price will change by ________ than the change in production cost in the _______ .

• A) more; long run
• B) less; short run
• C) less; long
• D) more; long

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Definitions:

Price

The amount of money required to purchase a good, service, or asset.

Inflation

The speed at which prices for general goods and services go up, resulting in a decline in how much money can buy.

Economy's Overall Price Level

The average of current prices across the entire spectrum of goods and services available in the economy, indicating inflation or deflation trends.

Rising

Describes an increase or upward movement in metrics such as price, quantity, or value.