Graph 14-7

-Refer to Graph 14-7. If the figure in panel (a) reflects the long-run equilibrium of a profit-maximising firm in a competitive market, the figure in panel (b) is most likely to reflect long-run market:

Question

Graph 14-7
 
-Refer to Graph 14-7. If the figure in panel (a) reflects the long-run equilibrium of a profit-maximising firm in a competitive market, the figure in panel (b) is most likely to reflect long-run market:

Quizplus · Accepted Answer

The figure in panel (b) shows a decrease in market supply, which would likely occur in response to a decrease in profitability for firms in the market. This decrease in supply represents a long-run adjustment in the market to restore equilibrium, suggesting that the original figure in panel (a) represented a situation where firms were earning a positive economic profit. Therefore, the correct choice is B (supply).

Graph 14-7 -Refer to Graph 14-7. If the Figure in Panel (A)