Suppose Each Firm's Long-Run Average Cost of Production Does Not

question 186

Multiple Choice

Suppose each firm's long-run average cost of production does not vary with the entry of new firms in a perfectly competitive industry and a long-run adjustment results in a smaller industry output but leaves price unchanged.Which of the following is likely to be true in this case?

• A)The market demand curve did not shift.
• B)The market demand curve shifted to the left, and the market supply curve shifted to the right.
• C)The market supply curve shifted to the left, and the market demand curve shifted to the right.
• D)Both market supply and demand increased, but supply increased more than demand.
• E)The industry is a constant-cost industry.

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Definitions:

Business Property

Assets, both tangible and intangible, owned by a business enterprise and used in its operations.

Punitive Damages

Financial compensation awarded in a lawsuit that exceeds simple restitution and is intended to punish the defendant for egregious conduct and deter similar future behavior.

Medical Expenses

Costs incurred from medical care, treatment, or procedures, potentially including hospitalization, medication, and professional fees.

Nominal Damages

A small amount of money awarded to a plaintiff in a lawsuit when a legal wrong has been suffered but no substantial harm was done.