If input prices for perfectly competitive firms increase as the output of its industry expands:

Question

Quizplus · Accepted Answer

When input prices increase as industry output expands, costs rise, causing short-run average cost curves to shift up (A). In the long run, higher input costs lead to a higher equilibrium price after demand increases (B). Initially, prices may rise above the new long-run equilibrium due to short-run supply constraints (C). Thus, all statements are true.

If Input Prices for Perfectly Competitive Firms Increase as the Output