If Firms Are Price Setters,a Small Decline in the Demand

question 94

Multiple Choice

If firms are price setters,a small decline in the demand for their outputs will cause them to

• A)reduce price and reduce the level of output produced.
• B)reduce output in the short run, but reduce price in the long run.
• C)reduce price in the short run, but reduce output only in the long run.
• D)increase price in the short run to offset the effect on profits of a decline in output.

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Definitions:

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Clear Boundaries

Well-defined limits or borders that distinguish one entity, area, or concept from another.

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