E $15 0 MC ATC Q MR-P The market for an inferior good is perfectly competitive in a constant cost industry and currently characterized by demand curve D1 and supply curve S1. A decrease in income will cause: a) the demand curve to shift to D2, causing firms to earn economic profits. The supply curve will shift to S2 and firms once again earn normal profits. the firms will continue to earn economic profits. b) the demand curve to shift to D2, causing firms to earn economic profits. The supply curve will remain the same ar c) the demand curve to shift to D1, causing firms to earn economic losses. The supply curve will decrease to S1 as fin exit the industry. Eventually the market price will rise and firms will earn normal profits. d) the supply curve to shift to S1, causing firms to earn economic losses. The demand curve will decrease to D1 as enter the industry. Eventually the market price will fall and firms will earn normal profits.

E $15 0 MC ATC Q MR-P The market for an inferior good is perfectly competitive in a constant cost industry and currently characterized by demand curve D1 and supply curve S1. A decrease in income will cause: a) the demand curve to shift to D2, causing firms to earn economic profits. The supply curve will shift to S2 and firms once again earn normal profits. the firms will continue to earn economic profits. b) the demand curve to shift to D2, causing firms to earn economic profits. The supply curve will remain the same ar c) the demand curve to shift to D1, causing firms to earn economic losses. The supply curve will decrease to S1 as fin exit the industry. Eventually the market price will rise and firms will earn normal profits. d) the supply curve to shift to S1, causing firms to earn economic losses. The demand curve will decrease to D1 as enter the industry. Eventually the market price will fall and firms will earn normal profits.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter11: Price And Output Determination: Monopoly And Dominant Firms

Section: Chapter Questions

Problem 2E: Ajax Cleaning Products is a medium-sized firm operating in an industry dominated by one large...

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