Consider a perfectly competitive market for a product x


Consider a perfectly competitive market for a product X that is in its long run equilibrium. Suppose that this is an inferior good, and that consumer's income increases and the increase 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.

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Business Economics: Consider a perfectly competitive market for a product x
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