Which of the Following Best Describes How a Perfectly Competitive

question 99

Multiple Choice

Which of the following best describes how a perfectly competitive industry would respond to a sudden increase in popularity of the product? The market demand curve would shift to the right, leading to:

• A)a higher equilibrium price in the short run and entry into the market in the long run.
• B)a higher equilibrium price in the short run and a permanent increase in economic profit.
• C)no change in the short-run equilibrium price, and a higher long-run equilibrium quantity.
• D)a lower short-run equilibrium price due to the entry of firms into the market.

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Definitions:

Value-Added Time

The portion of the production process where value is actually added to the product or service, as perceived by the customer.

Non-Value-Added Time

Periods during a manufacturing or service process that do not contribute directly to the final value or product, such as waiting or movement times, which businesses aim to minimize.

Reducing Wait Time

The process of minimizing the amount of time customers or clients have to wait for service or product delivery.

Reducing Inventory

The process of decreasing the amount of goods or materials a company holds, often aimed at improving efficiency and reducing cost.