Asked by roshell ayeshma on Jul 11, 2024

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The model of monopolistic competition characterizes a city's market for plumbing services.Suppose that the market is initially in long-run equilibrium,and then overall demand for plumbing services increases.In the short run,the price for plumbing services will _____ and total output in the market will _____.

A) fall;fall
B) not change;not change
C) rise;rise
D) rise;fall

Market Demand

The total quantity of a product or service that all consumers in a market are willing and able to purchase at various prices.

Plumbing Services

Professional services involved in installing, repairing, and maintaining the piping and fixtures associated with water distribution and waste water disposal.

Short Run

A period in economics during which at least one input (like capital) is fixed, focusing on immediate effects rather than long-term outcomes.

  • Examine the effects of rising demand in markets characterized by monopolistic competition and forecast the changes in market behavior.
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AM
Alejandra MartinezJul 18, 2024
Final Answer :
C
Explanation :
In the short run, an increase in demand for plumbing services in a monopolistically competitive market will lead to higher prices as firms capitalize on the increased willingness to pay. Additionally, total output will rise as firms increase production to meet the higher demand.