Assume a Constant-Cost Industry That Is Initially in Long-Run Competitive

question 150

Multiple Choice

Assume a constant-cost industry that is initially in long-run competitive equilibrium. An increase in demand will cause a(n) __________ in prices and profits, and as a result, firms will __________ the industry, causing the market supply curve to shift __________, which, in turn, will eventually cause the equilibrium price to be __________ before.

• A)decrease; exit; leftward; lower than
• B)increase; enter; rightward; higher than
• C)decrease; exit; rightward; higher than
• D)increase; enter; rightward; the same as
• E)increase; exit; leftward; lower than

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Definitions:

401k Plan

A retirement savings plan sponsored by an employer that allows employees to save and invest a piece of their paycheck before taxes are taken out.

Vacation Pay Expense

Represents the cost to an employer for employees' earned but not yet taken vacation time, recognized as a liability.

Operations Year

The 12-month period used by businesses to measure financial and operational performance, often aligning with the fiscal year but not necessarily the calendar year.

Defined Contribution Plan

A pension plan in which the contributions into the plan are defined but the employee’s pension may vary depending on investment performance.