Question

Which of the following will not happen in the long run as demand shifts to the left in a perfectly competitive market?

a.	Market price will fall.	b.	Firms will leave the market.
c.	The short-run industry supply curve will shift to the left.	d.	Equilibrium output will increase.

In the long run, what does it mean when demand shifts rightward in a perfectly competitive market?

a.	Equilibrium price will decrease.	b.	Firms will leave the market.
c.	The short-run industry supply curve will shift to the left.	d.	The short-run industry supply curve will shift to the right.

Which of the following is a correct perspective of market performance?

a.	For whom output will be produced.	b.	What will be produced
c.	All answers are correct	d.	How output will be produced.

What can be said about an economy where markets are perfectly competitive and have no externalities?

a.	There are more than enough products for everyone.	b.	Products yield attractively high economic profits.
c.	Products tend to be produced inefficiently.	d.	Products are produced efficiently.

Answer 1

Ans 1. d) Equilibrium output will increase.

When the demand curve shifts to the left in the long run in a perfectly competitive market then there would be a decrease in the equilibrium quantity.

Ans 2. d) The short run industry supply curve will shift to the right.

When the demand curve shifts to the right, it means that the demand in the market has increased. This increase in the demand is met by an increase in the supply of goods and thus the short run industry supply curve shifts to the right.

Ans 3. c) All answers are correct.

Economy has to allocate resources and choose what tp produce, how to produce and for whom t produce.

Ans 4. d) Products are produced efficiently.