Figure 6.5 -Figure 6.5 Shows the Short-Run and Long-Run Effects of an of an Increase

question 4

Multiple Choice

Figure 6.5
-Figure 6.5 shows the short-run and long-run effects of an increase in demand of an industry. The market is in equilibrium at point A, where 100 identical firms produce 6 units of a product per hour. If the market demand curve shifts to the right, what has happened to an individual firm's output level at point B?

• A) Each firm produces two more units per hour.
• B) Each firm produces relatively smaller level of output as more firms enter the market.
• C) Each firm will produce the same level of output.
• D) none of the above

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Definitions:

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