When a Competitive Market Experiences an Increase in Demand That

question 44

Multiple Choice

When a competitive market experiences an increase in demand that increases production costs for existing firms and potential new entrants, which of the following is most likely to arise?

• A)The long-run market supply curve will be upward sloping.
• B)The condition of free entry into the market will be violated.
• C)Producer profits will fall in the long run.
• D)The long-run market supply curve will be horizontal as new firms enter and drive the price downward.

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Definitions:

Stress Hormones

Hormones, including cortisol and adrenaline, that are released into the body in response to stress, affecting the body's metabolism and immune response.

Epinephrine

A hormone and neurotransmitter also known as adrenaline, crucial for the body's fight-or-flight response, increasing heart rate, and elevating blood sugar levels.

Adrenal Gland

Small, triangular-shaped glands located on top of each kidney that produce hormones such as adrenaline and cortisol, which help control blood sugar, burn protein and fat, react to stressors like a major illness or injury, and regulate blood pressure.

Psychophysiological Illness

Illnesses that are caused by or exacerbated by mental processes such as stress, rather than by organic or purely physical processes.