CFA Practice Question

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CFA Practice Question

In a perfectly competitive market, ______
A. price does more of the adjusting in the long run and quantity does more of the adjusting in the short run.
B. price does more of the adjusting in the short run and quantity does more of the adjusting in the long run.
C. only quantity adjusts in both the short run and the long run.
Explanation: In the short run, the number of firms is fixed, so quantity cannot adjust as much.

User Contributed Comments 4

User Comment
nsmaxsta But price doesnt change in a perfectly competitive market! Every firm sells at the same price in the short run.
nosense price does change and firms adjust their productions based on that. that's why we have a supply curve.
ddrmax thank you nosense. you are making perfect sense here
xemex131 lol ddrmax
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