Suppose a Purely Competitive, Increasing-Cost Industry Is in Long-Run Equilibrium

question 71

Multiple Choice

Suppose a purely competitive, increasing-cost industry is in long-run equilibrium. Now assume that a decrease in consumer demand occurs. After all resulting adjustments have been completed, the new equilibrium price

• A)and industry output will be less than the initial price and output.
• B)will be greater than the initial price, but the new industry output will be less than the original output.
• C)will be less than the initial price, but the new industry output will be greater than the original output.
• D)and industry output will be greater than the initial price and output.

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