Assume a Decreasing-Cost Industry That Is Initially in Long-Run Competitive

Multiple Choice

Assume a decreasing-cost industry that is initially in long-run competitive equilibrium. A decrease in demand will cause a(n) __________ in prices and profits, and as a result, firms will __________ the industry, causing the market supply curve to shift __________,which, in turn, will eventually cause the equilibrium price to be __________ before.

A) a decrease; exit; rightward; lower than
B) an increase; enter; rightward; higher than
C) a decrease; exit; leftward; higher than
D) an increase; enter; rightward; the same as
E) an increase; exit; leftward; lower than