Assume a Perfectly Competitive Firm Is in Long-Run Equilibrium and There

question 76

Multiple Choice

Assume a perfectly competitive firm is in long-run equilibrium and there is a decrease in market demand for the firm's output.Which of the following will occur?

• A)Existing firms will maintain the original level of output, but they will shift their cost functions down in the short run.
• B)Existing firms will raise price to cover the reduction in quantity demanded and maintain total revenue in the short run.
• C)Existing firms will reduce output in the short run.
• D)Market price will be above its original level.

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Definitions:

Yards

A unit of length equal to 3 feet or 36 inches, used in both the imperial and US customary systems.

Inches

A unit of length in the United States customary and British imperial systems, equal to one-twelfth of a foot or exactly 2.54 centimeters.

Conversion Formula

A mathematical formula used to convert measurements from one unit to another.