Refer to the information provided in Figure 12.3 below to answer the question(s) that follow. Figure 12.3
-Refer to Figure 12.3. The DVD industry is a constant-cost industry. As the demand for DVD players shifts from D to D' ,which of the following is least likely to result?
A) More resources will be allocated to produce DVD players.
B) The demand for DVDs will increase.
C) If the market for DVD players is competitive, the price will increase to $5.00 in the short and long run.
D) If the market for DVD players is perfectly competitive, economic profits in this industry will increase in the short run, but will fall back to zero in the long run.

Question

Refer to the information provided in Figure 12.3 below to answer the question(s) that follow.  Figure 12.3
-Refer to Figure 12.3. The DVD industry is a constant-cost industry. As the demand for DVD players shifts from D to D' ,which of the following is least likely to result?
A) More resources will be allocated to produce DVD players. 
B) The demand for DVDs will increase. 
C) If the market for DVD players is competitive, the price will increase to $5.00 in the short and long run. 
D) If the market for DVD players is perfectly competitive, economic profits in this industry will increase in the short run, but will fall back to zero in the long run.

Quizplus · Accepted Answer

If the demand for DVD players shifts from D to D', the price of DVD players may not increase if the market for DVD players is competitive. In the short and long run, the price will remain at the minimum average total cost, which is $4.00. Therefore, choice C is least likely to result. Choices A, B, and D are all possible outcomes of the shift in demand.

Refer to the Information Provided in Figure 12