Suppose that the market for haircuts in a community is perfectly competitive and that the market is initially in long-run equilibrium.Subsequently,a decrease in population decreases the demand for haircuts.In the short run,we expect that the market price will _____ and the output of a typical firm will _____.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, a decrease in demand leads to a decrease in market price and a decrease in the output of a typical firm in the short run, as firms adjust to the lower demand by reducing production and prices fall to equate the lower demand with supply.

Suppose That the Market for Haircuts in a Community Is