If, as a Perfectly Competitive Industry Expands, It Can Supply

question 254

Multiple Choice

If, as a perfectly competitive industry expands, it can supply larger quantities only at a higher long-run equilibrium price, it is

• A)a constant-cost industry.
• B)an increasing-cost industry.
• C)a decreasing-cost industry.
• D)a fixed-cost industry.

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Definitions:

Central Bank

An institution that manages a country's currency, money supply, and interest rates. Central banks also oversee the commercial banking system of their respective countries.

Sacrifice Ratio

The sacrifice ratio measures the cost of reducing inflation in terms of the percentage of GDP lost per each percentage point decrease in inflation.

Volcker Disinflation

A period during the early 1980s when the Federal Reserve, led by Chairman Paul Volcker, raised interest rates to historically high levels in order to combat high inflation.

Estimates

Approximations or educated guesses based on current trends and data.