The demand for clothing increases. As a result, the price of clothing increases above the minimum average cost of producing it. In the long run, if the clothing industry is perfectly competitive and is a constant-cost industry:

Question

Quizplus · Accepted Answer

In a perfectly competitive and constant-cost industry, an increase in demand leads to an increase in supply as firms enter the market, driving the price back to the minimum average cost.

The Demand for Clothing Increases