Suppose the Market for Sprouts Is in Long-Run Equilibrium

question 8

Multiple Choice

Suppose the market for sprouts is in long-run equilibrium. In the short run, what will happen if an E. coli outbreak reduces the demand for sprouts?

• A) The marginal cost curve will shift downward for each producer, leaving prices unchanged.
• B) The market price of sprouts will fall, causing each firm to produce fewer sprouts.
• C) Existing firms will expand output to make up for the decrease in demand.
• D) The marginal cost curve will shift upward for each producer, causing prices to rise and profits to fall.

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Definitions:

Automated Teller Machine

An electronic banking machine that allows customers to complete basic transactions without the need for a branch representative.

Information Access

The ability or the right to obtain and use information, typically emphasizing ease or barriers to entry in the context of technology or data.

Cash Management

The process of collecting, managing, and investing a company's cash flow in a way that optimizes its financial stability and profitability.

Investment

The process of distributing funds with the aim of earning returns or profits.