In a Decreasing-Cost Industry

question 125

Multiple Choice

In a decreasing-cost industry,

• A)there will be no firm entry because the increased supply will reduce the long-run equilibrium price.
• B)the law of demand does not apply.
• C)greater demand leads to higher long-run equilibrium prices.
• D)lower demand leads to higher long-run equilibrium prices.

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Definitions:

Quantity of Money

The total amount of money in circulation within an economy, including cash, coins, and balances held in checking and savings accounts.

Classical School

An economic theory that emphasizes free markets, the importance of supply and demand in determining prices, and the idea that economies are self-regulating systems.

Supply-Side

Economic policies aimed at increasing production and supply of goods and services, often through tax cuts or deregulation.

Milton Friedman

A prominent economist known for his theories on consumption analysis, monetary history and theory, and the complexity of stabilization policy.