Suppose an Increase in Product Demand Occurs in a Decreasing-Cost

question 115

Multiple Choice

Suppose an increase in product demand occurs in a decreasing-cost industry. As a result,

• A) the new long-run equilibrium price will be lower than the original long-run equilibrium price.
• B) equilibrium quantity will decline.
• C) firms will eventually leave the industry.
• D) the new long-run equilibrium price will be higher than the original price.

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Definitions:

Standard Error

An estimate of the standard deviation of the sampling distribution of a statistic, often used to assess the precision of sample estimates of population parameters.

Sampling Distribution

The probability distribution of a given statistic based on a random sample, showing how the statistic varies from sample to sample.

Populations

Populations in statistical analysis refer to entire groups of individuals, events, or items which share at least one common characteristic.

Standard Error

Refers to the standard deviation of the distribution of sample means around the population mean.