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If demand surges, the industry-wide output will rise in the long-run due to:

A) an increase in the number of firms within the industry

B) an increase in the profit-maximizing level of output for each firm

C) an increase in efficiency

D) an increase in the number of firms within the industry and in the amount produced by each firm.

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Joshua Stredder
Joshua StredderLv10
28 Sep 2019

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Related questions

17. (From Sample Test) A perfectly competitive industry is in short run equilibrium with "n" identical firms and each firm is initially making normal profits. Under these circumstances, which one of the following statements is correct in the short run production period? With an increase in industry demand, each firm would make economic profits and would produce a larger output * With an increase in industry demand, each firm would make economic profits and new firms would enter the industry c) With an increase in fixed costs, each firm would make economic losses and some existing firms would leave the industry With a decrease in industry demand, each firm would make economic losses and would produce a higher output With a decrease in variable costs, each firm would make economic profits and would produce a lower output. d)

1. New firms entering a competitive industry will cause the price of the product to

a. fall, due to an increase in supply

b. rise, due to an increase in supply

c. fall, due to an increase in demand

d. rise, due to an increase in demand

e. (a) and (c) above are both correct

2. A perfectly competitive industry in long-run equilibrium is described as being technologically efficient because

a. firms produce at the low point on their LRAC curve

b. firms produce at the minimum efficient scale level of output (qMES)

c. firms earn more than the cost of capital

d. firms are not profitable

e. (a) and (b) above are both correct

19. Suppose that a perfectly competitive constant cost industry is initially in short and long- run equilibrium. What is the effect of an increase in fixed costs on the short-run equilibrium price, the industry output, the output of the firm, and profit of the firm? (A) no change in price, firm output, or profit, but a decrease in industry output (B) no change in price, industry output, firm output, or profit (C) no change in price, firm output, or industry output but a decrease in profit (D) increase in price, industry output, firm output, and profit (E) increase in price, industry output, and firm output, but decrease in profit (F) increase in price and industry output, decrease in profit but no change in firm output (G) increase in price and firm output, decrease in profit but no change in industry output (H) increase in firm output and industry output, decrease in profit but no change in price (I) none of the above

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