Consider a monopolistically competitive market in long-run equilibrium, and a firm that is in the market. Suppose there is a shortage of a key input, so that every firm's ATC curve shifts up by a fixed amount. If the firm remains in the market in the new long-run equilibrium, what happens to the price at which it sells the good, and what quantity does it sell? O Price goes down, quantity stays the same Price goes up, quantity stays the same Price goes down, quantity goes down Price goes up, quantity goes down
Consider a monopolistically competitive market in long-run equilibrium, and a firm that is in the market. Suppose there is a shortage of a key input, so that every firm's ATC curve shifts up by a fixed amount. If the firm remains in the market in the new long-run equilibrium, what happens to the price at which it sells the good, and what quantity does it sell? O Price goes down, quantity stays the same Price goes up, quantity stays the same Price goes down, quantity goes down Price goes up, quantity goes down
Chapter14: Monopolistic Competition And Product Differentiation
Section: Chapter Questions
Problem 5P
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