Consider a Competitive Market with a Large Number of Identical

question 138

Multiple Choice

Consider a competitive market with a large number of identical firms. The firms in this market do not use any resources that are available only in limited quantities. In this market, an increase in demand will

• A)increase price in the short run but not in the long run.
• B)increase price in the long run but not in the short run.
• C)increase price both in the short and the long run.
• D)not affect price in either the short or the long run.

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Definitions:

Proximity

A principle of perception that elements close to each other tend to be perceived as a group.

Similarity

The state or fact of being alike; often used to describe how alike two or more objects, ideas, or concepts are.

Closure

The psychological term for seeking a sense of resolution or completion.

Binocular Disparity

The difference in the images received by the two eyes as a result of their horizontal separation, which is used for depth perception.