Assume That a Perfectly Competitive Increasing-Cost Industry Is in Long-Run

Assume that a perfectly competitive increasing-cost industry is in long-run equilibrium when market demand suddenly increases.Which of the following statements is not correct?

A) Existing firms will earn economic profits in the new long-run equilibrium
B) Existing firms will increase output in the short run
C) New firms will enter the industry in the long run
D) Some resource suppliers to the industry will earn higher income
E) The new long-run equilibrium price will exceed the original equilibrium price

Correct Answer:

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