The possibility of more firms entering an industry in the long run tends to make long-run industry supply more price elastic than short-run industry supply.

Question

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In the long run, firms have more flexibility to adjust their production levels and enter or exit the industry. This means that if the price of the product increases, more firms will enter the industry, leading to a larger increase in supply and a smaller increase in price compared to the short run. Therefore, long-run industry supply is generally more price elastic than short-run industry supply.

The Possibility of More Firms Entering an Industry in the Long