Suppose a Perfectly Competitive Industry Is in Long-Run Equilibrium

question 215

Multiple Choice

Suppose a perfectly competitive industry is in long-run equilibrium. If a decrease in demand leads to a higher long-run price, we know that

• A) this is a decreasing-cost industry.
• B) this is an increasing-cost industry.
• C) some firms will be losing money in the long run.
• D) after further adjustments, price will fall to its original level.

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Definitions:

Monetary Transfers

Financial transactions that involve the movement of money from one party to another, which can be domestic or international in nature.

Fund Balance―Nonspendable

The portion of a government's fund balance that cannot be spent because it is either not in spendable form or legally or contractually required to be maintained intact.

General Fund

A primary accounting fund used by a government to record its general operating revenues and expenses.

Fund Balance

The net assets of a governmental fund calculated as the difference between fund assets and liabilities, reflecting the financial position of the fund.