A sudden fall in the market demand in a competitive industry leads to a. A short run market equilibrium price lower than the original equilibrium b. A market equilibrium price higher than the short run price c. Some firms exiting the market d. All of the above
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This means that at the original equilibrium price, there is now an excess supply of goods. In the short run, firms may not be able to adjust their production levels immediately, so they may continue to produce at the same level. However, with excess supply, they Show more…
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