-Assume the Initial Equilibrium Is at Point D in Figure

question 162

Multiple Choice

-Assume the initial equilibrium is at point D in Figure 9-13.If the market demand curve shifts from D₁ to D₂,and this results in entry of new firms in the long-run,the new equilibrium in this increasing-cost industry will be

• A) both C and E
• B) both D and E
• C) at a price less than P₁
• D) at a price higher than P₁
• E) at an output greater than Q₁

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Definitions:

Supply Reduction

A decrease in the amount of a good or service that producers are willing to provide, often due to factors like high production costs or regulatory measures.

Union

A worker association that bargains with employers over wages and working conditions.

Employed

The state of having paid work; a person who performs work for wages or salary in a part-time or full-time position.

AFL-CIO

The American Federation of Labor and Congress of Industrial Organizations, a federation of labor unions in the United States.