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Assume That an Inferior Good Is Produced in a Perfectly

Question 193

Multiple Choice

Assume that an inferior good is produced in a perfectly competitive,increasing-cost industry with external diseconomies.The market is initially in long-run equilibrium.After all long-run adjustments are made,which of the following would occur in this market as a result of an increase in consumers' incomes?


A) The market price would remain unchanged;the market quantity would rise.
B) The market price would rise;the market quantity would fall.
C) The market price would remain unchanged;the market quantity would fall.
D) Both the market price and the market quantity would fall.
E) Both the market price and the market quantity would rise.

Correct Answer:

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