If the Long-Run Response of This Industry to a Shift

question 20

Multiple Choice

If the long-run response of this industry to a shift in the demand schedule to Demand₁ is to increase supply out to Supply₁,then compared to its initial position,a typical firm in long-run equilibrium

• A) makes more profit.
• B) reduces its long-run average cost.
• C) finds its marginal cost higher.
• D) finds its average cost unchanged.
• E) finds that the price for its product has risen.

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Definitions:

Increase

A rise in value or quantity, often observed in financial metrics, operational metrics, or physical measurements.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities, indicative of the shareholders' ownership interest.

Creditors

Individuals or institutions to whom money is owed by a debtor for goods, services, or loans provided.

Investors

Persons or organizations that invest funds anticipating financial gains in return.