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16 May, 02:33

18. A constant-cost, perfectly competitive widget industry is in long-run equilibrium. A decrease in the

price of gadgets, a substitute for widgets, will most likely result in

A. an increase in the demand for widgets, followed by a decrease in the supply of widgets

B. higher short-run and long-run prices for widgets

C. short-run losses for widget producers, followed by the exit of some firms

D. an upward shift in all short-run cost curves, followed by a higher long-run price for widgets

E. a higher short-run price for widgets, followed by an increase in the quantity produced

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Answers (1)
  1. 16 May, 03:31
    0
    A. an increase in the demand for widgets, followed by a decrease in the supply of widgets

    Explanation:

    This obeys the laws of demand and supply. As price reduces, demand increases and supply reduces.
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