If Input Costs Remain the Same as Industry Output Expands

question 104

Multiple Choice

If input costs remain the same as industry output expands, what would you expect to be the long-run impact of an increase in demand on an industry currently in long-run equilibrium?

• A) There will be more firms, and the price will increase.
• B) There will be fewer firms, but the price will remain the same.
• C) There will be fewer firms, and the price will decrease.
• D) There will be more firms, but the price will remain the same.

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Definitions:

Catharsis Hypothesis

The theory suggesting that expressing or releasing strong emotions leads to a relief from those emotions, often resulting in a sense of rejuvenation and reduction in stress.

Two-Factor Theory

A theory in psychology, often related to emotion or motivation, suggesting two factors are necessary to produce a certain outcome or effect.

Adaptation-Level Phenomenon

The psychological principle that states individuals judge new experiences based on their past experiences.

James-Lange Theory

A theory suggesting that emotions are the result of physiological reactions to events.