Assume That a Perfectly Competitive Increasing-Cost Industry Is in Long-Run

question 32

Multiple Choice

Assume that a perfectly competitive increasing-cost industry is in long-run equilibrium when market demand suddenly increases.Which of the following statements is not correct?

• A)Existing firms will earn economic profits in the new long-run equilibrium
• B)Existing firms will increase output in the short run
• C)New firms will enter the industry in the long run
• D)Some resource suppliers to the industry will earn higher income
• E)The new long-run equilibrium price will exceed the original equilibrium price

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Definitions:

Liquidated Debt

A debt for which the amount owed is known and undisputed.

Unliquidated Debt

A debt for which the amount has not been predetermined or agreed upon, often because the extent of damages or compensation cannot be readily quantified.

Accord And Satisfaction

A legal contract where a dispute is settled by the parties involved agreeing to give and accept something of value in resolution, significantly altering the original contract's terms.

Unilateral Contract

A contract in which one party promises to perform a specific action in return for a performance, not a promise, by the other party.