If New Manufacturers Enter the Computer Industry, Then, Holding All

question 304

Multiple Choice

If new manufacturers enter the computer industry, then, holding all other things constant,

• A)each "old" manufacturer must sell fewer computers than before.
• B)some "old" manufacturers must exit the industry.
• C)the equilibrium price of computers must rise.
• D)the equilibrium quantity demanded of computers must rise.

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Definitions:

Short-Run Equilibrium

A situation in a market where demand equals supply, resulting in a stable price level, but which may not reflect long-term market dynamics.

Competitive Price-Taker

A rephrased scenario where businesses in competitive markets accept the prevailing market price as given because they have no power to influence it.

Profit

The financial gain realized when the revenue earned from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Marginal Revenue

The additional revenue that a firm receives from selling one more unit of a good or service.