A Perfectly Competitive Market Is in Equilibrium and Then Demand

question 38

Multiple Choice

A perfectly competitive market is in equilibrium and then demand decreases.The decrease in demand means the market price will ________ and eventually there will be ________.

• A) rise; entry by new firms
• B) fall; exit by existing firms
• C) fall; entry by new firms
• D) rise; exit by existing firms
• E) fall; neither entry nor exit because the market is perfectly competitive

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Definitions:

Activism

The practice of campaigning or taking action to bring about political or social change.

Random Sampling

A method of sampling where every element of the population has an equal chance of being selected.

Luck Of The Draw

A phrase referring to the outcome being determined by chance rather than any controllable factors.

Probability Sampling

A sampling technique in which every member of the population has a known, non-zero chance of being selected.