Assume that a constant-cost industry experiences an increase in demand. In the long run, this will cause the price to be

Question

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In a constant-cost industry, the cost of production remains constant even if demand and output increase. As a result, an increase in demand will cause an increase in output and sales, but it will not impact the cost of production. Therefore, the increase in demand will lead to an increase in the equilibrium quantity but not in the equilibrium price. The price will remain at its original equilibrium level.

Assume That a Constant-Cost Industry Experiences an Increase in Demand