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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