If There Is a Decrease in Demand for a Product

question 1

Multiple Choice

If there is a decrease in demand for a product in a purely competitive industry, it results in an industry contraction that will end when the product price is

• A) greater than its marginal cost.
• B) equal to its marginal cost.
• C) less than its marginal cost.
• D) greater than its average cost.

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Definitions:

Transnational Corporation

A large company that operates in multiple countries, managing production or delivering services in more than one country.

Motorcycle Manufacturer

A company that designs, produces, and sells motorcycles.

Foreign Subsidiary

A company that is owned or controlled by another company, known as the parent company, and is located in a country different from where the parent company is situated.

Sweatshops

Work environments that have poor working conditions, violations of labor laws, and unethical treatment of workers, often with extremely low pay.