If the demand curve in a constant cost market shifts up and to the right, then:
A)the long run price stays the same and the long run quantity goes up.
B)the short run price goes up and the short run quantity goes down.
C)the short run price stays the same and the long run quantity goes up.
D)the long run price stays the same and the long run quantity goes down.

Question

Quizplus · Accepted Answer

In a constant cost market, the cost of production remains the same regardless of the level of output. If the demand curve shifts up and to the right, it means that consumers are willing to buy more at any given price. This leads to an increase in the long run quantity. Since costs are constant, there is no pressure to increase prices in the long run, so the long run price stays the same. Therefore, in the long run, both price and quantity increase. In the short run, there may be a temporary increase in price due to the increased demand, but as firms expand production in response to higher demand, the short run quantity also increases.

If the Demand Curve in a Constant Cost Market Shifts