Beginning from the Long-Run Equilibrium in an Increasing-Cost Industry, If

question 79

Multiple Choice

Beginning from the long-run equilibrium in an increasing-cost industry, if there is a substantial, permanent fall in demand for industry output, _____.

• A)firms will leave the industry, the quantity produced will fall, and prices will end up lower than their initial long-run equilibrium level
• B)firms will leave the industry, the quantity produced will fall, and prices will end up higher than their initial long-run equilibrium level
• C)firms will leave the industry, the quantity produced will fall, and prices will end up at the same level as their initial long-run equilibrium level
• D)firms will enter the industry, the quantity produced will rise, and prices will end up lower than their initial long-run equilibrium level
• E)firms will enter the industry, the quantity produced will fall, and prices will end up at the same level as their initial long run equilibrium level

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Definitions:

Net Realizable Value

The estimated selling price of goods, minus the estimated cost of completion and any costs necessary to make the sale.

Retained Earnings

Profits that a company keeps or retains rather than distributing to shareholders as dividends, often used for reinvestment.

Overstated

The description of financial statements or figures that have been reported at amounts higher than is factual or realistic.

Understated

Understated refers to financial information that is reported at a figure less than the actual value, inadvertently decreasing net income or asset values.