In an increasing-cost industry, an unexpected decrease in demand would lead to a _____ costs and a _____ price in the long run.

Question

Quizplus · Accepted Answer

In an increasing-cost industry, an unexpected decrease in demand would lead to lower costs and lower prices in the long run. This is because the industry's supply curve slopes upward; as demand decreases, firms reduce production, which decreases the demand for inputs, leading to lower input prices and thus lower costs and prices.

In an Increasing-Cost Industry, an Unexpected Decrease in Demand Would