In a decreasing-cost industry,
A) there will be no firm entry because the increased supply will reduce the long-run equilibrium price.
B) the law of demand does not apply.
C) greater demand leads to higher long-run equilibrium prices.
D) lower demand leads to higher long-run equilibrium prices.

Question

Quizplus · Accepted Answer

In a decreasing-cost industry, as demand decreases, costs decrease, leading to lower prices. Therefore, lower demand can lead to higher long-run equilibrium prices due to reduced supply and increased costs.

In a Decreasing-Cost Industry