Suppose There Is a Large and Permanent Increase in the Demand

question 122

Multiple Choice

Suppose there is a large and permanent increase in the demand for a good produced in a competitive industry. We should expect that:

• A) existing firms will face lower sunk costs.
• B) competition in the industry will decrease.
• C) existing firms' average cost curves will shift upwards.
• D) firms will enter the industry because the market price will rise.

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Definitions:

Product Performance

An evaluation of how well a product does its intended job, including its efficiency, reliability, and overall user satisfaction.

Subliminal Perception

The process by which individuals can respond to information and stimuli that are below the level of conscious awareness.

Selective Retention

The process by which individuals remember only that information which aligns with their beliefs or knowledge, often leading to biased decision-making.

Consumer Purchase Decision Process

The stages a buyer goes through in making choices about which products or services to buy, including problem recognition, information search, evaluation of alternatives, purchase decision, and post-purchase behavior.