In Problem 14, do firms enter or exit the market in the long run? What is the market price and the equilibrium quantity in the long run?
What will be an ideal response?
The firms are incurring economic losses, so some firms exit the market. As firms exit the market, the market supply decreases so that in the long run the price rises to equal the minimum average total cost, $4.25 per smoothie. When the price is $4.25 for a smoothie, the equilibrium quantity is 550 smoothies per hour.
Economics
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Which of the following would shift the aggregate demand curve to the right?
A) an increase in government spending B) an increase in taxes C) an increase in interest rates D) an increase in input prices
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