Suppose an Increase in Product Demand Occurs in a Decreasing-Cost

question 74

Multiple Choice

Suppose an increase in product demand occurs in a decreasing-cost industry.As a result,

• A)the new long-run equilibrium price will be lower than the original long-run equilibrium price.
• B)equilibrium quantity will decline.
• C)firms will eventually leave the industry.
• D)the new long-run equilibrium price will be higher than the original price.

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Definitions:

United States

A country in North America consisting of 50 states and a federal district, known for its significant influence on world economy, politics, and culture.

Deadweight Loss

The loss of economic efficiency that can occur when equilibrium for a good or a service is not achieved or is not achievable.

Tariff

A levy placed on goods and services brought into a country to raise their cost and enhance the competitiveness of homegrown products.

Globalization

The process by which businesses or other organizations develop international influence or start operating on an international scale, leading to increased interconnectedness and interdependence of economies worldwide.