In a decreasing-cost industry,
A)there will be no firm entry because the increased supply will reduce the long-run equilibrium price.
B)the law of demand does not apply.
C)greater demand leads to higher long-run equilibrium prices.
D)lower demand leads to higher long-run equilibrium prices.

Question

Quizplus · Accepted Answer

In a decreasing-cost industry, as demand decreases, firms exit, reducing supply and increasing long-run equilibrium prices.

In a Decreasing-Cost Industry