Assume a perfectly competitive industry is in long-run equilibrium at a price of $75. If this industry is a constant-cost industry and the demand for the product decreases, long-run equilibrium will be reestablished at a price
A. less than $75.
B. greater than $75.
C. of $75.
D. either greater than or less than $75 depending on the magnitude of the decrease in demand.
Answer: C
You might also like to view...
If an increase in the growth rate of the money supply results in an equal increase in the rate of inflation with no effect on any real variables, we say that
A) the classical dichotomy fails. B) money is neutral. C) money is superneutral. D) money is the most preferred store of value.
Johnny has allocated $30 toward coffee and tea and feels that coffee and tea are perfect substitutes. Due to differences in caffeine levels, his MRS of tea for coffee equals 2. If coffee and tea sell for the same price, Johnny will
A) spend all $30 on tea. B) spend all $30 on coffee. C) spend $20 on coffee and $10 on tea. D) be indifferent between any bundle of coffee and tea costing $30.