A Competitive Market Is in Long-Run Equilibrium

question 251

Multiple Choice

A competitive market is in long-run equilibrium. If demand increases, we can be certain that price will

• A)rise in the short run. Some firms will enter the industry. Price will then rise to reach the new long-run equilibrium.
• B)rise in the short run. Some firms will enter the industry. Price will then fall to reach the new long-run equilibrium.
• C)fall in the short run. All, some, or no firms will shut down, and some of them will exit the industry. Price will then rise to reach the new long-run equilibrium.
• D)not rise in the short run because firms will enter to maintain the price.

---

Definitions:

Outside Order Takers

are sales personnel who visit customers or potential customers in their places of business or residences to take orders for products or services but do not engage in proactive selling.

Replenish Inventory

The process of adding more stock or supplies to existing inventory to meet demand.

Outside Order Takers

Sales personnel who primarily accept and process orders from clients outside the company premises, rather than actively selling or persuading customers.

Replenish Inventory

The process of restocking products or materials to maintain adequate levels to meet consumer or production demands.