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A Perfectly Competitive Market Is in Equilibrium and Then Demand

Question 3

Multiple Choice

A perfectly competitive market is in equilibrium and then demand decreases. The decrease in demand means the market price will ________ and eventually there will be ________.


A) rise; entry by new firms
B) rise; exit by existing firms
C) fall; entry by new firms
D) fall; exit by existing firms
E) fall; neither entry nor exit because the market is perfectly competitive

Correct Answer:

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