Recall the Application about federal quality standards in the market for kiwifruit to answer the following question(s).Recall the Application. The asymmetric information about kiwifruit was reduced by:

In a market system, what must take place for quantity demanded to continually be equated with quantity supplied?

A) Price controls must be applied by governments. B) Relative prices must be able to adjust to market clearing levels. C) Tastes and preferences of consumers must adjust to eliminate surpluses or shortages. D) Businesses must engage in involuntary, unprofitable exchanges to eliminate surpluses or shortages.

Suppose that firms in a monopolistically competitive industry are earning short-run economic profits. In the long run, the demand curve facing each individual firm can be expected to

a. shift to the left and become flatter b. shift to the left and become steeper c. shift to the right and become flatter d. shift to the right and become steeper e. remain constant