If the Demand for a Product Increases in an Increasing

question 102

Multiple Choice

If the demand for a product increases in an increasing cost industry, as the market adjusts in the long run,

• A) price will rise.
• B) the firm's per-unit costs will increase.
• C) the firm's per-unit costs will fall.
• D) the market price will return to its initial position.

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Definitions:

Residual Claimants

Individuals or entities that have a claim on the remaining assets of a company after all liabilities have been satisfied, typically the shareholders.

State University

A publicly funded university that is primarily supported by a state government.

Barrier to Entry

Factors that prevent or hinder companies from entering into a specific market or industry.

Allocative Efficiency

A state of resource allocation where every good or service is produced up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing it.