A competitive market is in long-run equilibrium. If demand decreases, what can we be certain will happen to price?

Question

Answer

Price will fall in the short run. All firms will shut down and some of them will exit the industry. Price will then rise.

Answer

Price will not fall in the short run because firms will exit to maintain the price.

Answer

none of the above

Answer

Price will fall in the short run. No firms will shut down, but some of them will exit the industry. Price will then rise.

Answer

Price will fall in the short run. All, some, or no firms will shut down, and some of them will exit the industry. Price will then rise.

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