Author Question: In a perfectly competitive industry, assume there is a permanent increase in demand for a product. ... (Read 46 times)

skymedlock · **on:** Jun 30, 2018

In a perfectly competitive industry, assume there is a permanent increase in demand for a product. The process of transition to a new long-run equilibrium will include:
a. the exit of firms.
b. temporarily lower production costs.
c. both a and b.
d. neither a nor b.

Question 2

For an inferior good, the income elasticity of demand is negative.
a. True
b. False
Indicate whether the statement is true or false