Asked by Silvia Gopalakrishnan on Jul 05, 2024
Verified
Which statement is false?
A) In the market period,industry supply is either perfectly inelastic or very inelastic.
B) In the short run,an increase in demand cannot lead to an increase in a firm's output.
C) If an increase in demand is considered to be long lasting,new firms will tend to enter the industry.
D) Supply is most elastic in the long run.
Industry Supply
The total quantity of a product or service that all firms in a particular market or industry are willing and able to sell at various price levels.
Market Period
A very short time frame in which the supply of a good is completely inelastic, meaning that the quantity cannot be changed in response to a change in price.
Perfectly Inelastic
A situation where quantity demanded or supplied does not change in response to any price change.
- Understand the short-run and long-run adjustments in the market and their effects on elasticity
Verified Answer
ZK
Zybrea KnightJul 06, 2024
Final Answer :
B
Explanation :
In the short run, an increase in demand can lead to an increase in a firm's output, but only up to a certain point where the firm's fixed inputs are fully utilized. Beyond that point, the firm would need to invest in additional fixed inputs to further increase its output, which would take time and therefore fall into the long run.
Learning Objectives
- Understand the short-run and long-run adjustments in the market and their effects on elasticity