The Cranberry Market Is Perfectly Competitive

question 254

Multiple Choice

The cranberry market is perfectly competitive.Reports that consuming cranberries can lead to improved health result in a permanent increase in the demand for cranberries and an immediate upward jump in the price of cranberries.As time passes,the price of cranberries ________ and the initial firms' economic ________.

• A) falls; profit will be eliminated
• B) rises still higher; loss will be eliminated
• C) rises still higher; profit will not change
• D) falls; loss will be increased
• E) falls; profit will not change

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Definitions:

Supply Curve

A graphical representation showing how the quantity of a good that producers are willing to supply changes as the price of the good changes.

Quota

A government-imposed trade restriction that limits the number or monetary value of goods that can be imported or exported during a particular time frame.

Supply Price

The minimum price at which a producer is willing to sell a good or service, influenced by production costs and market conditions.

Demand Curve

A graph showing the relationship between the price of a good and the quantity of the good that consumers are willing and able to purchase at each price level.