Purely Competitive Industry X Has Constant Costs and Its Product

question 15

Multiple Choice

Purely competitive industry X has constant costs and its product is an inferior good.The industry is currently in long-run equilibrium.The economy now goes into a recession and average incomes decline.The result will be

• A)an increase in output and in the price of the product.
• B)an increase in output, but not in the price, of the product.
• C)a decrease in the output, but not in the price, of the product.
• D)a decrease in output and in the price of the product.

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Definitions:

Order Policy

Guidelines established by a company to determine minimum inventory levels, reorder points, and order quantities to manage inventory effectively.

Basic EOQ Model

The Economic Order Quantity model, a formula used to determine the optimal quantity of inventory to order, minimizing total inventory costs.

Ordering Cost

Expenses incurred in placing and processing orders for products or materials, including administrative costs and the cost of receiving and inspecting the items.