The cost of adding a third worker to a shift in a manufacturing plant is less than the current average cost of adding workers. If the third worker is added, the average cost for the manufacturing plant ______.

Which of the following statements about markets is true?

a. Markets reduce the opportunity costs of making exchanges. b. Markets expand the range of buyers and sellers available as counterparties. c. Markets increase the transaction costs of making exchanges. d. Markets increase the costs of information.

Figure 10-9

Figure 10-9 shows supply and demand conditions in a perfectly competitive industry and for a firm in that industry. Assume the industry initially has supply curve S₁ and demand curve D₁. If demand shifts to D₂, then in the short run price will

a.
rise to A.

b.
rise to some level between A and B.

c.
remain at B.

d.
fall to C.