A Competitive Market Is in Long-Run Equilibrium

question 251

Multiple Choice

A competitive market is in long-run equilibrium. If demand increases, we can be certain that price will

• A)rise in the short run. Some firms will enter the industry. Price will then rise to reach the new long-run equilibrium.
• B)rise in the short run. Some firms will enter the industry. Price will then fall to reach the new long-run equilibrium.
• C)fall in the short run. All, some, or no firms will shut down, and some of them will exit the industry. Price will then rise to reach the new long-run equilibrium.
• D)not rise in the short run because firms will enter to maintain the price.

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Definitions:

Nineteenth Century

The period from January 1, 1801, to December 31, 1900, marked by significant industrial, cultural, and political changes worldwide.

Theodore Roosevelt

The 26th President of the United States (1901-1909) known for his progressive policies and strong leadership in conservation and foreign affairs.

Conservation

The practice of protecting the natural environment and preserving natural resources from loss, degradation, or waste.

Frontier

The edge of a settled area, or the boundary between the known and unknown, often associated with westward expansion in American history.