Under what conditions would an increase in demand lead to a lower long-run equilibrium price?
A)The firms in the market are part of a decreasing-cost industry.
B)The firms in the market produce an inferior good.
C)Potential new firms in the market are not attracted by economic profits.
D)Increases in demand cannot lead to lower long-run equilibrium prices.

Question

Quizplus · Accepted Answer

In a decreasing-cost industry, as demand increases, firms experience lower average costs due to economies of scale or technological improvements, which can lead to a lower long-run equilibrium price.

Under What Conditions Would an Increase in Demand Lead to a Lower