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A Perfectly Competitive Market Is in Long-Run Equilibrium

Question 64

Multiple Choice

A perfectly competitive market is in long-run equilibrium. If the market demand curve shifts to the right, what do we expect to occur in this market?


A) Negative economic profits will attract new firms to the market, decreasing price until price equals average total cost.
B) Positive economic profits will attract new firms to the market, decreasing price until price equals average total cost.
C) Positive economic profits will attract new firms to the market, increasing price until price equals average total cost.
D) Positive economic profits will attract new firms to the market, decreasing price until price equals average variable cost.

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