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

Question

Quizplus · Accepted Answer

In an increasing cost industry, a decrease in demand will lead to higher costs and a higher price in the long run. This is because the fixed costs of production are spread over a smaller number of units, leading to a higher cost per unit. The higher costs will then be passed on to consumers in the form of a higher price.

In an Increasing Cost Industry, an Unexpected Decrease in Demand