If the demand curve in an increasing cost market shifts up and to the right, then:
A)both the short run and long run prices decrease.
B)both the short run and long run prices increase.
C)the short run price increases and the long run price stays the same.
D)both the short run and long run prices stay the same.

Question

Quizplus · Accepted Answer

In an increasing cost market, when demand increases (shifts up and to the right), both short run and long run prices increase. This is because the cost of production increases as firms expand output to meet higher demand, leading to higher prices in both the short run and long run.

If the Demand Curve in an Increasing Cost Market Shifts