Question

In several perfectly competitive markets for minerals extracted from the earth, steady increases in demand for the required minerals eventually have generated long-run increases in the market prices of these minerals. Which of the following statements best describes the types of adjustments that must have occurred in these markets to have brought about this outcome? A. An increase in demand raises price and profitability of the existing firms. Since firms cannot enter or exit the market, supply stays unchanged and price increases in the long run. B. An increase in demand raises price. But buyers purchase less since price increases. This reduces profitability of the firms. Some firms exit the market leading to a reduction in quantity and a further increase in price. C. An increase in demand initially leads to an increase in price and profits of the firms. New firms enter the market and the equilibrium quantity increases with an increase in market price along an upward rising long-run industry supply curve. D. An increase in demand raises the price and profits of the existing firms. New firms enter the market and as cost of production stays unchanged, a new competitive equilibrium is reached with a higher price. Such mineral industries can best be described as A. constant-cost industries. B. decreasing-cost industries. C. high-cost industries. D. increasing-cost industries.

          In several perfectly competitive markets for minerals extracted from the earth, steady increases in demand for the required minerals eventually have generated long-run increases in the market prices of these minerals.
Which of the following statements best describes the types of adjustments that must have occurred in these markets to have brought about this outcome?
A. An increase in demand raises price and profitability of the existing firms. Since firms cannot enter or exit the market,
supply stays unchanged and price increases in the long run.
B. An increase in demand raises price. But buyers purchase less since price increases. This reduces profitability of the firms. Some firms exit the market leading to a reduction in quantity and a further increase in price.
C. An increase in demand initially leads to an increase in price and profits of the firms. New firms enter the market and the equilibrium quantity increases with an increase in market price along an upward rising long-run
industry supply curve.
D. An increase in demand raises the price and profits of the existing firms. New firms enter the market and as cost of
production stays unchanged, a new competitive equilibrium is reached with a higher price.
Such mineral industries can best be described as
A. constant-cost industries.
B. decreasing-cost industries.
C. high-cost industries.
D. increasing-cost industries.

In several perfectly competitive markets for minerals extracted from the earth, steady increases in demand for the required minerals eventually have generated long-run increases in the market prices of these minerals.
Which of the following statements best describes the types of adjustments that must have occurred in these markets to have brought about this outcome?
A. An increase in demand raises price and profitability of the existing firms. Since firms cannot enter or exit the market,
supply stays unchanged and price increases in the long run.
B. An increase in demand raises price. But buyers purchase less since price increases. This reduces profitability of the firms. Some firms exit the market leading to a reduction in quantity and a further increase in price.
C. An increase in demand initially leads to an increase in price and profits of the firms. New firms enter the market and the equilibrium quantity increases with an increase in market price along an upward rising long-run
industry supply curve.
D. An increase in demand raises the price and profits of the existing firms. New firms enter the market and as cost of
production stays unchanged, a new competitive equilibrium is reached with a higher price.
Such mineral industries can best be described as
A. constant-cost industries.
B. decreasing-cost industries.
C. high-cost industries.
D. increasing-cost industries.

Added by Heather B.

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