Suppose a Perfectly Competitive Market Is in Long-Run Equilibrium with a Price

question 212

Multiple Choice

Suppose a perfectly competitive market is in long-run equilibrium with a price of $12.Then there is a permanent increase in demand.As a result,in the short run the market price ________ and in the long run the number of firms ________ and the price is ________ the price was in the short run.

• A) rises; does not change; is equal to
• B) rises; increases; higher than
• C) rises; does not change; lower than
• D) falls; decreases; is equal to
• E) rises; increases; lower than

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Definitions:

Latent Factor

An underlying variable that is not directly observed but influences patterns of correlation between observed variables.

Control Factor

An element or variable that is manipulated or held constant in a study or experiment to determine its effect on the outcome.

Independent Variable

In an experiment, the variable that is manipulated or changed to observe its effect on the dependent variable.

Dependent Variable

In research, the outcome factor that is measured to test the impact of variations in the independent variable.