A perfectly competitive industry with constant costs initially operates in long-run equilibrium.When demand increases,in the long run and the short run:

Question

Quizplus · Accepted Answer

In the short run, an increase in demand will lead to higher prices and positive economic profits, encouraging firms to enter the market. In the long run, as firms enter, supply increases, prices return to the original level, and output increases to meet the new demand.

A Perfectly Competitive Industry with Constant Costs Initially Operates in Long-Run