Assume That the Producers of an Input Have Substantial Economies

question 64

Multiple Choice

Assume that the producers of an input have substantial economies of scale in their production process.This input is purchased mainly by a group of firms in a perfectly competitive market that is initially in long-run equilibrium.After all long-run adjustments are made,which of the following would occur in the competitive output market as a result of shift in consumer tastes toward that market's product?

• A)The market price would fall;the market quantity would rise.
• B)The market price would rise;the market quantity would fall.
• C)The market price would remain unchanged;the market quantity would fall.
• D)Both the market price and the market quantity would fall.
• E)Both the market price and the market quantity would rise.

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