If the Market Demand for the Product Increases, in the Short

question 63

Multiple Choice

If the market demand for the product increases, in the short run a purely competitive firm

• A) will not change its output quantity because there are so many firms that the individual firm will not be affected by the change.
• B) will earn higher profits or experience smaller losses as a result of the change in the market.
• C) will experience no change in costs as it steps up production in response to the change in the market.
• D) can employ more inputs and increase the size of its plant, to respond to the change in the market.

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Definitions:

Financed Equipment

Assets such as machinery or office equipment that are bought with borrowed funds or through a lease arrangement.

Balance Sheet

A statement presenting a firm's financial position by detailing its assets, liabilities, and equity held by shareholders at a particular moment.

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Payments made to attorneys or law firms for legal services rendered.

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An insurance policy that protects property buyers and lenders against losses from defects in titles.