Asked by Mackenzie Kiernan on Jul 26, 2024
Verified
Refer to Figure 14-7. Assume that the market starts in equilibrium at point W in graph (b) and that graph (a) illustrates the cost curves facing individual firms. Suppose that demand increases from D0 to D1. Which of the following statements is not correct?
A) Point W is a long-run equilibrium point.
B) Points W, Y, and Z are short-run equilibria points.
C) Point Y is a long-run equilibrium point.
D) Point Z is a long-run equilibrium point.
Long-Run Equilibrium
A state in which supply and demand are balanced, and all firms in the industry are earning normal profits in the long term.
Short-Run Equilibria
A market condition where supply and demand are balanced, but only temporarily as external factors can soon alter this balance.
Demand Increases
A situation where the quantity of a good or service that consumers are willing and able to purchase at a given price rises.
- Understand the concept of market equilibrium and how it is represented graphically.
- Analyze the short-run and long-run effects of changes in demand and supply on market equilibrium.
- Identify the conditions for long-run equilibrium in competitive markets.
Verified Answer
Learning Objectives
- Understand the concept of market equilibrium and how it is represented graphically.
- Analyze the short-run and long-run effects of changes in demand and supply on market equilibrium.
- Identify the conditions for long-run equilibrium in competitive markets.
Related questions
(Figure: Game-Day Shirts)Use Figure: Game-Day Shirts ...
(Figure: Game-Day Shirts)Use Figure: Game-Day Shirts ...
If Demand Increases and Supply Decreases, Then Both the Equilibrium ...
Compare Changes in the Equilibrium Price and Quantity When Demand ...
A Sudden Fall in the Market Demand in a Competitive ...