Suppose a Firm in a Competitive Market Reduces Its Output

question 352

Multiple Choice

Suppose a firm in a competitive market reduces its output by 20 percent. As a result, the price of its output is likely to

• A)increase.
• B)remain unchanged.
• C)decrease by less than 20 percent.
• D)decrease by more than 20 percent.

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Definitions:

Export

The act of sending goods or services from one country to another country for sale or trade.

Comparative Advantage

The ability of a country or individual to produce a particular good or service at a lower opportunity cost than others.

Production Possibilities

The different mixes of products and services that a country can generate considering its accessible resources and current technology.

Total Output

The complete quantity of goods or services produced by a firm, industry, or economy within a specified period.