Entry of new firms in a decreasing-cost industry leads to an upward shift of the LRAC curve.

A bank failure occurs whenever

A) a bank cannot satisfy its obligations to pay its depositors and other creditors. B) a bank suffers a large deposit outflow. C) a bank has to call in a large volume of loans. D) a bank refuses to make new loans.

Which of the following best applies to the distinction between the "long run" and the "short run"?

A) The short run is a period of approximately 1-6 months while the long run is any time frame which is longer. B) In the short run, only new firms may enter, while in the long-run firms may either enter or exit the market. C) The rationing function of price is a short-run phenomenon whereas the guiding function is a long-run phenomenon. D) All of the above statements are correct.