A Perfectly Competitive Market Is Initially in Long-Run Competitive Equilibrium

question 63

Multiple Choice

A perfectly competitive market is initially in long-run competitive equilibrium. Then, market demand falls. By the time all adjustments have been made, price will be __________ its original level if the industry is a(n) __________ costs industry.

• A)above; decreasing
• B)at; constant
• C)at; increasing
• D)below; constant

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Definitions:

Units Of Output

The quantity of goods or services produced by a firm, sector, or economy within a given time period.

Measures Of Cost

Various metrics and methods used to quantify the expenses involved in producing a good or providing a service, including fixed, variable, and total costs, which are critical for business decision-making and pricing strategies.

Total Cost

The overall expenses incurred by a firm in producing goods or services, including both fixed and variable costs.

Average-Total-Cost Curve

A graphical representation that shows how the average total cost of production changes as the quantity of output is altered.