16. Suppose the plastic knob industry is perfectly competitive and that petroleum is an important ingredient in the manufacture of plastic knobs. If the price of petroleum increases, in the short run within individual firms in the plastic knob industry we would observe that:

1. price increases, output falls, and firms incur losses.
2. price falls, output increases, and firms incur losses.
3. price falls, output increases, and firms earned zero profit.
4. price stayed unchanged, output falls, and firms incur losses.
5. price stayed unchanged, output rises, and firms incur losses.

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