Question

13. Which of the following statements are correct about the movement from an initial long-run equilibrium to a new short-run equilibrium in a perfectly competitive market? You can presume that the industry demand curve is negatively sloped. I. As long as the marginal cost curve of each firm has its normal positive slope, a decrease in industry demand for the product will lead to losses for each firm in the industry. II. As long as the marginal cost curve has the normal positive slope, a decrease in industry demand for the product will lead to all firms shutting down. III. As long as the marginal cost curve has the normal positive slope, an excise tax will generally result in an excess burden. Which of the above statements are true? (A) I only (B) II only (C) III only (D) I and II (G) I and II and III (H) none of the above (E) I and III (F) II and III