Under What Conditions Would an Increase in Demand Lead to a Lower

question 68

Multiple Choice

Under what conditions would an increase in demand lead to a lower long-run equilibrium price?

• A)The firms in the market are part of a decreasing-cost industry.
• B)The firms in the market produce an inferior good.
• C)Potential new firms in the market are not attracted by economic profits.
• D)Increases in demand cannot lead to lower long-run equilibrium prices.

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Definitions:

Demand

The amount of a product or service that buyers are prepared and capable of buying at different price levels within a given time frame.

Inelastic Demand

Refers to a situation where the quantity demanded of a good or service changes little with a change in price.

Elastic Demand

A situation in which the demand for a good or service is highly responsive to changes in its price.

Bovine Infertility

A condition affecting cattle that reduces their ability to conceive and maintain pregnancy, potentially impacting agricultural productivity.