Suppose the Long-Run Supply Curve for a Perfectly Competitive Industry

question 116

Multiple Choice

Suppose the long-run supply curve for a perfectly competitive industry is horizontal at a price of $12,and the minimum short-run average variable cost for each of the identical N firms in the industry is $8.If the demand curve for the industry decreases so that it intersects the short-run supply curve of the industry at $10,

• A) in the short run the price will decrease to $10, and the number of firms will still be N. In the long run the price will return to $12, and the number of firms will be less than N.
• B) in the short run the price will decrease to $10, and the number of firms will be less than N. In the long run the price will return to $12, and the number of firms will return to N.
• C) in the short run the price will remain at $12, and the number of firms will still be N. In the long run the price will fall to $8, and the number of firms will be less than N.
• D) In the short run the price will decrease to $10, and the number of firms will be less than N. In the long run the price will return to $12, and the number of firms will return to N.

---

Definitions:

Behavioral Benefits

Behavioral benefits refer to positive changes in actions and reactions resulting from interventions, treatments, or personal development, leading to improved health and social outcomes.

Nature and Nurture

A concept in psychology and sociology that debates whether human behavior is determined by one's environment (nurture) or genetics (nature).

Plato

Ancient Greek philosopher, student of Socrates, teacher of Aristotle, known for his contributions to philosophy, mathematics, and the theory of forms.

Aristotle

An ancient Greek philosopher and polymath during the Classical period in Ancient Greece, one of the most important founding figures in Western philosophy.