Assume a Purely Competitive Increasing-Cost Industry Is in Long-Run Equilibrium

question 117

Multiple Choice

Assume a purely competitive increasing-cost industry is in long-run equilibrium. If a decline in demand occurs, firms will

• A)leave the industry, price will fall, and quantity produced will rise.
• B)enter the industry and price and quantity will both rise.
• C)leave the industry and price and quantity will both rise.
• D)leave the industry, price will fall, and quantity produced will fall.

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Definitions:

Settlement Day

The specific day on which the transfer of securities or commodities between buyer and seller is completed.

Swap Dealer

An individual or entity that acts as a counterparty in swap agreements, often in the derivatives and commodities markets.

Commercial Bank

A financial institution that offers services such as accepting deposits, providing business loans, and offering basic investment products.

Over The Counter

A decentralized market, without a central physical location, where traders conduct securities transactions directly between two parties without the supervision of an exchange.