Does the output of x fall in the short run

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Reference no: EM132123823

Question: Assume that X is produced in a perfectly competitive industry where firms that currently operate and potential competitors both have identical cost curves. Current output is 1 million units a year. What happens to industry equilibrium if a public agency competes with existing producers of X and gives away 100,000 units per year to randomly selected people who would otherwise have purchased X. Does the output of X fall in the short run? In the long run?

Reference no: EM132123823

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