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.

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