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Suppose that there is a permanent increase in demand for daisies. Which of the following is the most likely response in this market?
Group of answer choices
Profits will initially increase, but entry of other firms will drive profits back down again in the long run.
Profits will initially increase, and then remain at this higher level permanently.
Profits will initially increase, but exit of other firms will drive profits back down again in the long run.
Profits will initially decrease, as firms struggle to meet the demand, but profits will go back up again in the long run.
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Suppose that demand for a product is given by Q=1000-P. Supply of the product is given by Q=2P. There is a positive consumption externality from this product, in the amount of $5 per unit. What quantity of the good is consumed under the private marke..
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