Suppose that the sub sandwich business is a competitive,constant-cost industry.An increase in demand for sub sandwiches,will,in the long-run lead to
A) an increase in price and industry output,but no increase in the output of existing firms.
B) no increase in price,no increase in the output of existing firms but an increase in industry output because of new firms.
C) no increase in price and an increase in industry output as each existing firm produces more.
D) no changes in price,output of existing firms or the number of firms in the industry.

Question

Quizplus · Accepted Answer

In a competitive, constant-cost industry, an increase in demand will lead to an increase in industry output through the entry of new firms. The price and output of existing firms will remain unchanged. Therefore, choice B is the correct answer.

Suppose That the Sub Sandwich Business Is a Competitive,constant-Cost Industry