If a product is manufactured under conditions of constant cost, an increase in the demand for the product will increase
A) both equilibrium quantity and equilibrium price in the long run.
B) equilibrium price, but equilibrium quantity will be unchanged in the long run.
C) equilibrium quantity, but equilibrium price will be unchanged in the long run.
D) equilibrium quantity but reduce equilibrium price in the long run.

Question

Quizplus · Accepted Answer

Under constant cost conditions, an increase in demand will lead to an increase in equilibrium quantity as suppliers produce more to meet demand, but the equilibrium price will remain unchanged in the long run because costs do not change with increased production.

If a Product Is Manufactured Under Conditions of Constant Cost