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| Question | This question is based on the section The Long-Run Industry Supply Curve found on this book’s MyEconLab (www.myeconlab.com). A major theme of this chapter is the role that free entry and exit play in determining a competitive industry’s long-run equilibrium. Keeping this theme in mind, consider the following statement: In Industry X, demand and supply do determine price in the short run, but in the long run, only supply matters. a. Assuming that Industry X is a constant-cost industry, use a demand-and-supply diagram to illustrate why the statement is exactly correct. b. Now, assuming that Industry X is an increasing-cost industry, show in a demand-and-supply diagram why the statement is not quite correct. |
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| Subject | business-economics |
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