Question

29. Assume a perfectly competitive, constant-cost industry is initially in long-run equilibrium. What is the long-run effect of an A. B. increase in demand? P decreases and Q increases. P decreases and Q decreases. C. D. Q decreases but P remains unchanged. Pincreases and Q decreases. E. F. P increases and Q increases. Q increases but P remains unchanged. a perfecetly competitive, decreasing-cost industry is in long-run equilibrium. What is the long-run effect of a decrease in demand? A. P decreases and Q increases C. Q decreases but P remains unchanged. B. P decreases and Q decreases. D. P increases and Q decreases E. P increases and Q increases F. Q increases but P remains unchanged. 31. Assume a perfeetly competitive, increasing-cost industry is in long-run equilibrium. What is the long-run effect of an increase in demand? A. P decreases and Q increases C. Q decreases but P remains unchanged. E. P increases and Q increases B. P decreases and Q decreases. D. P increases and Q decreases F. Q increases but P remains unchanged Qnestions 32-41 are on the back of this page

Answer 1

29). In a cintant cost Industry in long run equilibrium, if demand increases, there will be increase in output but price will remain constant in long run.

​​​​​So , increase in demand => increase in quantity and no change in price.

30). In a decreasing cost industry in long run equilibrium, if demand increases , in long run quantity will raise but price will come down.

So increase in demand => increase in quantity and decrease in price in decreasing cost Industry.

31). In an increasing cost industry in long run equilibrium, average cost increases with the increase in output, supply curve slopes upward and demand curve normalyy negatively sloped. ​​ So if there is increase in demand, both the output and price will go up in long run.

So increase in demand => increase in quantity and increase in price.