Purely Competitive Industry X Has Constant Costs and Its Product

question 52

Multiple Choice

Purely competitive industry X has constant costs and its product is an inferior good. The industry is currently in long-run equilibrium. The economy now goes into a recession and average incomes decline. The result will be

• A)an increase in output and in the price of the product.
• B)an increase in output, but not in the price of the product.
• C)a decrease in the output, but not in the price of the product.
• D)a decrease in output and in the price of the product.

---

Definitions:

Operating Activities

Activities directly related to the primary operations of a business, including production, sales, and delivery of services.

Net Cash Provided

The amount of cash generated by a company's operations after accounting for outflows and inflows.

Cash Account

An account that shows the amount of cash a company has on hand or in the bank.

Cash Dividends

Profit distributions paid out by a corporation to its shareholders.