Suppose a perfectly competitive increasing-cost industry is in long-run equilibrium when market demand suddenly decreases. What happens to the industry in the long run?
a. It experiences no change from the original equilibrium
b. It experiences a higher equilibrium price and produces less output
c. It experiences a lower equilibrium price and produces less output
d. It experiences the same equilibrium price but produces more output
e. It experiences the same equilibrium price but produces less output
C
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A nominal depreciation of the Mexican peso (against all currencies) indicates that
A) the peso price of foreign currency has fallen. B) the Mexican real exchange rate will not change if the price level in Mexico falls. C) the peso price of, for example, the U.K. pound has increased. D) the number of units of foreign currency that one can obtain with one peso has decreased.
Which of the following is true in a perfectly competitive market?
a. The sellers can partially influence the price level in the market. b. All firms have identical costs. c. Entry or exit of new sellers into the market is restricted. d. Buyers and sellers have incomplete information about the product and the market.