Figure: Supply and Demand 
The figure depicts a constant cost industry. What happens if there is an increase in demand?
A) The price of the product stays at $10, although there may be a temporary shortage in the short run.
B) The price initially increases above $10 in the short run, but the entry of new firms and expansion of existing firms will push the long run price back down to $10.
C) The price initially increases above $10 in the short run, but the increased demand for resources will drive the long run price up even higher.
D) The price of the product stays at $10 in the short run, and then decreases as new firms enter the industry.
Correct Answer:
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