In longrun equilibrium with trade, losses from import
Competition will force some firms to ______________,
Increasing demand for the remaining firms' output, which will
Then cause their demand curves to become ______________,
Due to the increased variety of products from
_______________.
A)raise prices; steeper; new firms entering the industry
B)leave the industry; flatter; foreign firms
C)lower prices; more inelastic; new firms entering the industry
D)lay off workers; more elastic; the research and development departments in firms

Question

In long­run equilibrium with trade, losses from import
Competition will force some firms to ______________,
Increasing demand for the remaining firms' output, which will
Then cause their demand curves to become ______________,
Due to the increased variety of products from
_______________.
A)raise prices; steeper; new firms entering the industry
B)leave the industry; flatter; foreign firms
C)lower prices; more inelastic; new firms entering the industry
D)lay off workers; more elastic; the research and development departments in firms

Quizplus · Accepted Answer

In the long-run equilibrium with trade, losses from import competition can lead to some firms leaving the industry. This will increase demand for the output of the remaining firms, causing their demand curves to become flatter due to the increased variety of products from foreign firms. Therefore, the best choice is B.

In Long­run Equilibrium with Trade, Losses from Import

In Longrun Equilibrium with Trade, Losses from Import