Refer to Figure 9.7. Industry demand is initially D₁and industry supply is initially S₁ in this increasing cost industry. If ________, then in the long run the industry will move to point E.

A) supply decreases to S₂
B) supply remains at S₁
C) demand increases to D₂
D) demand decreases to D₂

Question

DK_Media works · Accepted Answer

Final Answer : C, Explanation :  In an increasing cost industry, if demand increases (option C), the industry adjusts by moving to a new equilibrium point in the long run, which could be represented by point E in the given context. This adjustment happens as the industry responds to higher demand with increased production, which may lead to higher costs and prices, settling at a new equilibrium.

Definitions

Learning Objectives

Learning Objectives

Related questions

Refer to Figure 9.7. Industry demand is initially D1 and industry supply is initially S1 in this increasing cost industry. If ________, then in the long run the industry will move to point E.A) supply decreases to S2B) supply remains at S1C) demand increases to D2D) demand decreases to D2

Definitions

Learning Objectives

Learning Objectives

Related questions