Suppose a competitive market has a horizontal long-run supply curve and is in long-run equilibrium. If demand decreases, we can be certain that in the short-run,
a. at least some firms will shut down.
b. price will fall below marginal cost for some firms.
c. price will fall below average total cost for some firms.
d. at least some firms will enter the industry.
c
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“Due to lower grain prices, consumers can expect retail prices of choice beef to begin dropping slightly this spring with pork becoming cheaper after midsummer,” the Agriculture Department predicted. “This reflects increasing supply,” the
department said. Does the statement use the term “supply” correctly? What effects might this announcement have on consumer demand? Please provide the best answer for the statement.
Exchange rates that are allowed to fluctuate in the open market in response to changes in supply and demand are known as
A) fixed exchange rates. B) gold exchange rates. C) flexible exchange rates. D) IMF exchange rates.