Consider a perfectly competitive market for a product X that is in its long run equilibrium. Suppose that this is a normal good, and that consumer’s income decreases and the decrease is expected to be permanent. Assuming that the prices of the inputs remain constant, then the quantity of X traded will decrease in the short run and the number of firms in the industry will go up in the long run the price of X will increase in the short run and the number of firms in the industry will go up in the long run the price of X will decrease in the short run and the number of firms in the industry will go down in the long run None of the above
Consider a perfectly competitive market for a product X that is in its long run equilibrium. Suppose that this is
a normal good, and that consumer’s income decreases and the decrease is expected to be permanent. Assuming that the prices of the inputs remain constant, then<table><tbody><tr><td> the quantity of X traded will decrease in the short run and the number of firms in the industry will go up in the long run </td> </tr><tr><td> the price of X will increase in the short run and the number of firms in the industry will go up in the long run </td> </tr><tr><td> the price of X will decrease in the short run and the number of firms in the industry will go down in the long run </td> </tr><tr><td> None of the above</td> </tr></tbody></table>
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