Which of the Following Best Describes the Series of Events

question 156

Multiple Choice

Which of the following best describes the series of events shown in the figure? The original conditions prior to the change are shown by D₀ and S₀ (point A) , and SLR is the market long-run supply curve.

• A) an increase in demand and an expansion in the number of firms in an increasing cost industry
• B) an increase in demand and an expansion in the number of firms in a decreasing cost industry
• C) an increase in demand and an expansion in the number of firms in a constant cost industry
• D) none of the above

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Definitions:

Drive-Reduction Theory

A theory of motivation suggesting that biological needs create internal drives that seek to be reduced by satisfying those needs.

Arousal Theory

A theory that suggests people are motivated to maintain an optimal level of arousal, neither too high nor too low.

Avoid Stress

Avoiding stress refers to strategies or actions taken to reduce or eliminate sources of tension and anxiety in one’s life.

Yerkes-Dodson Law

A psychological principle stating that there is an optimal level of arousal for performance on tasks—too little arousal can lead to underperformance, whereas too much can lead to errors.