Assuming long- run external economies exist, when demand increases in a perfectly competitive market, in the long run the average total cost curve for a typical firm

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Long-run external economies refer to reductions in a firm's costs due to factors outside the firm but within the industry, such as improvements in technology or infrastructure, that occur as the industry's output increases. When demand increases in a perfectly competitive market, it can lead to an expansion of the industry, which may trigger these external economies. As a result, the average total cost curve for a typical firm in the industry shifts downward, reflecting lower costs per unit of output.

Assuming Long- Run External Economies Exist, When Demand Increases in a Perfectly