Assume a Purely Competitive Constant-Cost Industry Is Initially at Long-Run

question 177

Multiple Choice

Assume a purely competitive constant-cost industry is initially at long-run equilibrium. Now suppose that a decrease in demand occurs. After all the long-run adjustments have been completed, the new equilibrium price

• A) and industry output will be less than the initial price and output.
• B) will be the same as the initial price, and the output will be less.
• C) will be greater than the initial, but the new output will be less.
• D) will be less than the initial price, but the new output will be greater.

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