Exhibit 22-9

Refer to Exhibit 22-9. Assume that demand increases from D₁ to D₂; in the new long run equilibrium, price settles at a level between P₁ and P₂ This means that the industry in question is a(n) __________-cost industry.

Question

Exhibit 22-9
Exhibit 22-9 Refer to Exhibit 22-9. Assume that demand increases from D1 to D2; in the new long run equilibrium, price settles at a level between P1 and P2 This means that the industry in question is a(n) __________-cost industry. A) decreasing B) increasing C) constant D) marginal E) low

Exhibit 22-9 Refer to Exhibit 22-9. Assume that demand increases from D<sub>1</sub> to D<sub>2</sub>; in the new long run equilibrium, price settles at a level between P<sub>1</sub> and P<sub>2</sub> This means that the industry in question is a(n) __________-cost industry. A) decreasing B) increasing C) constant D) marginal E) low

Refer to Exhibit 22-9. Assume that demand increases from D₁ to D₂; in the new long run equilibrium, price settles at a level between P₁ and P₂ This means that the industry in question is a(n) __________-cost industry.

Quizplus · Accepted Answer

In a decreasing-cost industry, an increase in demand results in lower costs for the firms in the industry, leading to a lower equilibrium price. In an increasing-cost industry, an increase in demand leads to higher costs for the firms in the industry, causing a higher equilibrium price. Since the price settles at a level between P₁ and P₂, it suggests that the industry is an increasing-cost industry, and the best answer choice is B.

Exhibit 22-9 ​ Refer to Exhibit 22-9. Assume That Demand Increases from D1

Exhibit 22-9 Refer to Exhibit 22-9. Assume That Demand Increases from D₁