Suppose That a Long-Run Adjustment in a Perfectly Competitive Industry

question 136

Multiple Choice

Suppose that a long-run adjustment in a perfectly competitive industry results in decreased industry output but leaves price unchanged.Which of the following must be true?

• A)The market demand curve did not shift
• B)The market demand curve shifted left; the market supply curve shifted right
• C)The market supply curve shifted left; the market demand curve shifted 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:

Useful Life

The period over which an asset is expected to be usable by an entity, affecting its depreciation or amortization schedules.

Revised Estimated

An updated forecast or projection based on new information or a more accurate assessment.

Depreciating Equipment

This refers to the reduction in the value of equipment over time due to wear and tear or obsolescence, recognized as an expense in accounting.

Estimated Total Useful Life

The approximate duration of time that an asset is expected to be functional and economically viable.