15) Consider an industry populated by identical firms, facing constant input prices, and having all the...
15) Consider an industry populated by identical firms, facing constant input prices, and having all the other characteristics of a perfectly competitive market. Which of the following statements describes the new long-run market equilibrium resulting from a shift in demand?
A) a shift in demand has no effect on the long-run average cost and so there is no change in equilibrium price and quantity.
B) a shift in demand will change the equilibrium price and quantity.
C) a shift in demand has no effect on the long-run average cost, resulting in change in equilibrium quantity but not price.
D) a shift in demand has no effect on the long-run average cost, resulting in change in equilibrium price but not quantity. E) a shift in demand is not possible
Homework Answers
Answer - Option B
A shift in demand will change the equilibrium price and quantity
If the demand shifts right , there will be rise in the equilibrium prive and quantity . If the demand shifts left , there will be a fall in the price and the equilibrium quantity.
All the given options are not correct regarding the shift of demand.
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15) Consider an industry populated by identical firms, facing
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