If there is an increase in demand in the long run for an increasing-cost industry,the market price will fall.

Question

Quizplus · Accepted Answer

In an increasing-cost industry, the cost of producing each unit of output increases as the industry expands. If demand increases in the long run, firms will have to pay higher costs to produce the same quantity of output, which will lead to higher prices rather than lower prices. Therefore, the statement is false.

If There Is an Increase in Demand in the Long