On August 5,2003,a Tragic Fire Destroyed a Large Jim Beam

question 59

Multiple Choice

On August 5,2003,a tragic fire destroyed a large Jim Beam whiskey factory in Kentucky.Assume that the U.S.market for whiskey is perfectly competitive,and that the market was originally in long run equilibrium.What would be the effects of such a whiskey factory fire?

• A)An increase in supply would cause a reduction in price,which would then lead to entry of firms.
• B)A decrease in supply would cause an increase in price,which would then lead to entry of firms.`
• C)An increase in supply would cause an increase in price,which would then lead to entry of firms
• D)A decrease in supply would cause an increase in price,which would then lead to exit of firms.
• E)Price of the whiskey remains unchanged and the existing firms continue to earn zero economic profit.

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Definitions:

Integument

The natural covering of an organism or an organ, such as skin, shell, or membrane.

Telangiectasia

The expansion of small blood vessels near the surface of the skin or mucous membranes, causing visible red lines or patterns.

Comedo

A comedo is a type of acne lesion caused by the blockage of a hair follicle by sebum and dead skin cells, which can appear as blackheads or whiteheads.

Exudate

A fluid rich in protein and cellular elements that oozes out of blood vessels due to inflammation and is deposited in nearby tissues.