Beginning from a Long Run Equilibrium in a Competitive Industry,if

question 83

Multiple Choice

Beginning from a long run equilibrium in a competitive industry,if there is a substantial,permanent increase in demand for industry output:

• A) firms will enter the industry, the quantity produced will rise, and prices will end up lower than their initial long run equilibrium level.
• B) firms will enter the industry, the quantity produced will rise, and prices will end up higher than their initial long run equilibrium level.
• C) firms will enter the industry, the quantity produced will rise, and prices will end up at the same level as their initial long run equilibrium level.
• D) firms will enter the industry, the quantity produced will rise, and but without more information, we cannot know if prices will end up higher than their initial long run equilibrium level.

---

Definitions:

Price Discrimination

A pricing strategy where identical or substantially similar goods or services are sold at different prices by the same provider in different markets.

Antitrust Laws

Legislation enacted to prevent monopolies and promote competition among businesses, ensuring fair market practices and consumer protection.

Deadweight Loss

Deadweight loss refers to a loss in economic efficiency that can occur when the equilibrium for a good or a service is not achieved or is not achievable.

Marginal Cost

The cost of producing one additional unit of a product or service, reflecting the change in total cost that arises from an increase in production.