Assume a purely competitive increasing-cost industry is in long-run equilibrium. If a decline in demand occurs, firms will

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In a purely competitive increasing-cost industry, a decline in demand leads to firms leaving the industry because it becomes less profitable. As firms exit, the supply decreases, leading to a fall in quantity produced. The price also falls due to the initial decline in demand.

Assume a Purely Competitive Increasing-Cost Industry Is in Long-Run Equilibrium