Suppose that monopolistically competitive firms in a certain market are experiencing losses. In the transition from this initial situation to a long-run equilibrium,
a. the number of firms in the market decreases.
b. each existing firm experiences a decrease in demand for its product.
c. each firm experiences an upward shift of its marginal cost and average total cost curves.
d. each existing firm's average total cost falls to bring economic profit back to zero.
a
You might also like to view...
Suppose that Canada decides to peg its dollar ($C, or the loonie) to the U.S. dollar at an exchange rate of $C1 = $US1. Now suppose that the increase in the price of oil in the second half of 2007 causes the IS curve in the United States to shift to the left. If all other things remain unchanged, what will happen to U.S. interest rates?
A) They will rise. B) They will fall. C) They will not change. D) They will rise dramatically.
A rightward shift of the demand curve will lead to an
A) increase in equilibrium price. B) excess demand at the old equilibrium price. C) increase in quantity supplied. D) All of the above.