Suppose the Equilibrium Price in a Perfectly Competitive Industry Is

question 47

Multiple Choice

Suppose the equilibrium price in a perfectly competitive industry is $100,and a firm in the industry charges $112.Which of the following is likely to happen?

• A)The firm will not be able to sell any of its output.
• B)The firm will sell more output than its competitors.
• C)The firm's profits will increase.
• D)The firm's revenue will increase.
• E)The firm will gradually take over the entire industry.

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Definitions:

Consumer Surplus

The discrepancy between the total price consumers are ready to pay for a good or service and what they actually pay for it.

Producer Surplus

The disparity between the price at which sellers are prepared to offer a product and the actual selling price they get.

Consumer Surplus

The difference between the highest amount a consumer is willing to pay and the actual price paid.

Supply Shift

A change in the quantity of a good that suppliers are willing and able to sell at each price, represented by a shift of the supply curve to the left or right.