Suppose a Perfectly Competitive Constant-Cost Industry Is in Long-Run Equilibrium

question 209

Multiple Choice

Suppose a perfectly competitive constant-cost industry is in long-run equilibrium when market demand suddenly falls.What happens to the industry in the long run?

• A)It experiences no change form the original equilibrium
• B)It experiences a higher equilibrium price and produces more output
• C)It experiences a lower equilibrium price but produces more output
• D)It experiences the same equilibrium price but produces more output
• E)It experiences the same equilibrium price but produces less output

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Definitions:

Lapsed

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Verbal Offer

A proposal made orally to enter into a contract or agreement, which can be legally binding if it meets certain criteria.

Invitation to Do Business

An expression of interest or a solicitation that is not legally binding, essentially a preparatory step to entering negotiations.

Lapsed

Refers to something that has expired or fallen out of use, often due to the passage of time or failure to renew.