Suppose a Competitive Industry Is in Long-Run Equilibrium

question 123

Multiple Choice

Suppose a competitive industry is in long-run equilibrium. When demand increases, market price

• A)decreases in the short and long run.
• B)rises in the short run and falls in the long run.
• C)decreases in the short run and rises in the long run.
• D)rises in the short and long run.
• E)rises in the short run and rises more in the long run.

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Definitions:

Large Stock Dividend

A dividend payment made in the form of additional shares rather than cash, usually representing a significant increase in a company's share base.

Price-earnings Ratio

A ratio for valuing a company that measures its current share price relative to its per-share earnings.

Weighted-average Shares

A calculation used in finance to adjust the number of outstanding shares for changes over a reporting period, impacting earnings per share calculations.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities, representing ownership equity spread among shareholders.