If input costs remain the same as industry output expands,what would you expect to be the long-run impact of an increase in demand on an industry currently in long-run equilibrium?

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Quizplus · Accepted Answer

In the long-run, firms will be able to enter the industry and existing firms will expand their output. However, since input costs remain the same, there will be no increase in production costs. This means that the industry's supply curve will shift to the right, leading to an increase in supply which will prevent the price from increasing. Thus, there will be more firms but the price will remain the same.

If Input Costs Remain the Same as Industry Output Expands,what