In a perfectly competitive market, in response to a permanent increase in demand:
a. the short run equilibrium price will be higher than the eventual long run equilibrium price
b. the short run equilibrium price will be lower than the eventual long run equilibrium price.
c. the short run equilibrium price will be the same as than the eventual long run equilibrium price.
d. we cannot know whether the short run equilibrium price will be above, below or equal to the eventual long run equilibrium price.
a
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Suppose the equilibrium price of cotton is $100 per ton. A price support set at ________ than $100 per ton ________
A) less; increases producer surplus B) less; increases consumer surplus C) more; increases consumer surplus D) more; decreases marginal cost E) more; creates a surplus that the government must buy
Regulatory commissions often set a(n) ____ for a regulated business
A) economic profit. B) fair rate of return. C) overhead charge. D) entry barrier.