If an Industry Has a Horizontal Long-Run Industry Supply Curve

question 91

Multiple Choice

If an industry has a horizontal long-run industry supply curve, then which of the following must be true?

• A)An increase in market demand results in firm entry, and so market price declines in the long run.
• B)An increase in market demand results in industry expansion, and so market price increases in the long run.
• C)A decrease in market demand results in firm exit, and so market price in the long run remains the same as before the market demand change.
• D)A decrease in market demand results in firm exit, and so market price in the long run declines in the long run.
• E)Any change in market demand has no effects on firms.

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