A Competitive Market Is in Long-Run Equilibrium

question 10

Multiple Choice

A competitive market is in long-run equilibrium.If demand decreases,what can we be certain will happen to price

• A)Price will fall in the short run.All firms will shut down and some of them will exit the industry.Price will then rise.
• B)Price will fall in the short run.No firms will shut down, but some of them will exit the industry.Price will then rise.
• C)Price will fall in the short run.All, some, or no firms will shut down, and some of them will exit the industry.Price will then rise.
• D)Price will not fall in the short run because firms will exit to maintain the price.