Suppose a perfectly competitive increasing-cost industry is in long-run equilibrium when market demand suddenly decreases. What might happen to the typical firm in the long run?
a. It would experience no change from the original equilibrium
b. It would experience a higher equilibrium price
c. It would experience a lower equilibrium price
d. It would experience the same equilibrium price but would increase output
e. It would experience a lower average total cost and would increase output
C
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Other things the same, an increase in the price level causes the interest rate to
a. increase, the dollar to depreciate, and net exports to increase. b. increase, the dollar to appreciate, and net exports to decrease. c. decrease, the dollar to depreciate, and net exports to increase. d. decrease, the dollar to appreciate, and net exports to decrease.
Which of the following statements is true?
A) A decrease in demand causes a decrease in the equilibrium price; the decrease in price causes supply to decrease. B) A decrease in demand causes the equilibrium price to fall; the decrease in price then results in a decrease in quantity supplied. C) If both demand and supply increase, there must be an increase in the equilibrium price; equilibrium quantity may either increase or decrease. D) If demand decreases and supply increases one cannot determine if the equilibrium price will increase or decrease without knowing which change is greater.