Suppose That There Has Been Bad Weather, a Decrease in the Availability

question 9

Multiple Choice

Suppose that there has been bad weather, a decrease in the availability of oil, or some other temporary increase in firms' costs and the economy has reached its new short-run equilibrium. What happens as the economy moves from this short-run equilibrium to long-run equilibrium?

• A)Prices and output rise.
• B)Prices and output fall.
• C)Prices rise and output falls.
• D)Prices fall and output rises.

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Definitions:

Rights of Individuals

Legal, social, or ethical principles of freedom or entitlement; the fundamental normative rules about what is allowed or owed to people.

Markets

Places or structures where buyers and sellers interact to exchange goods, services, or information under specific economic conditions.

Economic Efficiency

A situation where resources are allocated in a way that maximizes the production of goods and services at the lowest cost to society.

Pollution

The introduction of contaminants into the natural environment, causing adverse change.