Suppose the market for AR-15 style rifles in the United States was in an initial long-run equilibrium. In the fall of 2012, the demand for these rifles increased substantially due to concerns that President Obama would either ban or restrict the sale of these semi-automatic rifles. As a result, the market price of these rifles increased, and gun manufacturers earned positive economic profits (shown in the figure below). The presence of economic profits in the short-run will lead to the ________.
A) entry of new firms and cause the market supply curve to shift out until the final market price equals the minimum of the average total cost for the representative firm
B) entry of new firms and cause the market demand curve to shift in until the final market price equals the minimum of the average total cost for the representative firm
C) exit of existing firms from the industry and cause the market supply curve to shift in, raising profits for existing firms
D) exit of existing firms from the industry and cause the market demand curve to shift in until the final market price equals the minimum of the average total cost for the representative firm

Question

Suppose the market for AR-15 style rifles in the United States was in an initial long-run equilibrium. In the fall of 2012, the demand for these rifles increased substantially due to concerns that President Obama would either ban or restrict the sale of these semi-automatic rifles. As a result, the market price of these rifles increased, and gun manufacturers earned positive economic profits (shown in the figure below).  The presence of economic profits in the short-run will lead to the ________.
A) entry of new firms and cause the market supply curve to shift out until the final market price equals the minimum of the average total cost for the representative firm 
B) entry of new firms and cause the market demand curve to shift in until the final market price equals the minimum of the average total cost for the representative firm 
C) exit of existing firms from the industry and cause the market supply curve to shift in, raising profits for existing firms 
D) exit of existing firms from the industry and cause the market demand curve to shift in until the final market price equals the minimum of the average total cost for the representative firm

Quizplus · Accepted Answer

The Answer of Suppose the market for AR-15 style rifles in the United States was in an initial long-run equilibrium. In the fall of 2012, the demand for these rifles increased substantially due to concerns that President Obama would either ban or restrict the sale of these semi-automatic rifles. As a result, the market price of these rifles increased, and gun manufacturers earned positive economic profits (shown in the figure below).  The presence of economic profits in the short-run will lead to the ________.
A) entry of new firms and cause the market supply curve to shift out until the final market price equals the minimum of the average total cost for the representative firm 
B) entry of new firms and cause the market demand curve to shift in until the final market price equals the minimum of the average total cost for the representative firm 
C) exit of existing firms from the industry and cause the market supply curve to shift in, raising profits for existing firms 
D) exit of existing firms from the industry and cause the market demand curve to shift in until the final market price equals the minimum of the average total cost for the representative firm

Suppose the Market for AR-15 Style Rifles in the United