Assume a Purely Competitive Increasing-Cost Industry Is Initially in Long-Run

question 44

Multiple Choice

Assume a purely competitive increasing-cost industry is initially in long-run equilibrium, producing 10 million units at a market price of $5.00. Suppose that an increase in consumer demand occurs. After all economic adjustments have been completed, which output and price combination is most likely to occur?

• A)11 units at a price of $4.75.
• B)12 units at a price of $5.50.
• C)9.5 units at a price of $4.50.
• D)9 units at a price of $5.25.

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