If a Perfectly Competitive Firm Is Operating in Long-Run Equilibrium

question 198

Multiple Choice

If a perfectly competitive firm is operating in long-run equilibrium and market demand suddenly falls, the short-run result will be

• A)greater economic profit
• B)a normal profit
• C)lower average total cost
• D)lower average variable cost
• E)an economic loss

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Definitions:

Widgets

A generic term often used to refer to any product or manufactured good.

Equilibrium Quantity

The quantity of goods or services supplied is exactly equal to the quantity of goods or services demanded at the market equilibrium price.

Demand

The amount of a product or service that buyers are ready and able to buy at different prices over a specified time frame.

Supply

The total amount of a specific good or service available for purchase at any given time.