How would such a change affect the market equilibrium in the short run?.
Suppose the costs of production in a competitive market fall by $1 per unit at every output level. A Show more Suppose the costs of production in a competitive market fall by $1 per unit at every output level. Assume the number of firms is fixed in the short run but not in the long run. a. How would such a change affect the market equilibrium in the short run? Equilibrium price increases and equilibrium quantity decreases; profits are negative. Neither equilibrium price nor equilibrium quantity changes; profits are positive. Equilibrium price does not change and equilibrium quantity increases; profits are positive. Equilibrium price increases and equilibrium quantity does not change; profits are negative. Equilibrium price decreases and equilibrium quantity increases; profits are positive. b. How would such a change affect the market equilibrium in the long run? Price increases and quantity decreases; profits equal zero. Price increases and quantity decreases; profits are positive Neither price nor quantity changes; profits are positive. Price decreases and quantity increases; profits are positive. Price decreases and quantity increases; profits equal zero. Show less
How would such a change affect the market equilibrium in the short run?
