Under What Conditions Would an Increase in Demand Lead to a Lower

question 130

Multiple Choice

Under what conditions would an increase in demand lead to a lower long-run equilibrium price?

• A) The firms in the market are part of a decreasing-cost industry.
• B) The firms in the market produce an inferior good.
• C) Potential new firms in the market are not attracted by economic profits.
• D) Increases in demand cannot lead to lower long-run equilibrium prices.

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Definitions:

Consumer Surplus

The discrepancy between the sum consumers intend to pay for a product or service and the sum they really pay.

Power Transmission Wire

Conductors used in power transmission systems to carry electricity over long distances from power plants to electrical substations.

Domestic Demand

The total demand for goods and services within a country's borders.

Foreign Demand

The desire and willingness of buyers in other countries to purchase goods and services from a particular country.