Assume that a rise in petroleum prices increases the cost of milk transportation from the dairies to the market.We can expect the long-run supply curve in this industry to shift downward.

Question

Quizplus · Accepted Answer

In the long-run, an increase in transportation costs due to higher petroleum prices would likely cause the supply curve to shift upward, indicating a decrease in supply or an increase in the cost of production, not downward.

Assume That a Rise in Petroleum Prices Increases the Cost