When existing firms leave a perfectly competitive industry, ________
A) the equilibrium price decreases, while the equilibrium quantity increases
B) the equilibrium price increases, while the equilibrium quantity decreases
C) both the equilibrium price and quantity increase
D) both the equilibrium price and quantity decrease
B
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Suppose the market-clearing price of wheat is $2.50 per bushel. What would happen if wheat farmers persuaded the government to set a legally-mandated price support of $3.75 per bushel?
A) The quantity demanded of wheat would fall. B) The quantity supplied of wheat would rise. C) A surplus of wheat would occur. D) All of the above.
The ability to lower the average costs of production as the quantity produced increases is called
a. Economies of scale b. Economies of scope c. Diseconomies of scale d. Diseconomies of scope