Assuming That the Demand for Cars Is Constant, an Increase

question 33

Multiple Choice

Assuming that the demand for cars is constant, an increase in the cost of labour used in producing cars will lead to:

• A) an increase in the equilibrium price but a decrease in the equilibrium quantity.
• B) a decrease in the equilibrium price but an increase in the equilibrium quantity.
• C) a decrease in both the equilibrium price and quantity.
• D) an increase in both the equilibrium price and quantity.

Evaluate the reasons firms enter, stay in, or exit from a market.

Differentiate between average revenue, marginal revenue, and their importance to profit-maximizing firms.

Understand conditions under which the long-run supply curve can be perfectly elastic or slope upward.

Identify circumstances that display the rationale behind seemingly irrational market behaviors.