Asked by Faustine Hudson on May 13, 2024
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Purely competitive industry X has constant costs and its product is an inferior good.The industry is currently in long-run equilibrium.The economy now goes into a recession and average incomes decline.The result will be:
A) an increase in output and in the price of the product.
B) an increase in output,but not in the price,of the product.
C) a decrease in the output,but not in the price,of the product.
D) a decrease in output and in the price of the product.
Inferior Good
A good or service whose consumption declines as income rises, prices held constant.
Constant Costs
Costs that remain unchanged regardless of the level of production or activity.
Long-Run Equilibrium
A state in which all firms in a market are making zero economic profit, with no firm having an incentive to enter or exit the industry.
- Examine the effects of shifts in consumer demand on the balance of market forces across various industry sectors.
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Learning Objectives
- Examine the effects of shifts in consumer demand on the balance of market forces across various industry sectors.
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