Suppose a Perfectly Competitive Increasing-Cost Industry Is in Long-Run Equilibrium

Suppose a perfectly competitive increasing-cost industry is in long-run equilibrium when market demand suddenly increases.What happens to the typical firm in the long run?

A) It experiences no change from the original equilibrium
B) It experiences a higher average total cost and equilibrium price
C) It experiences a lower average total cost and equilibrium price
D) It experiences the same equilibrium price but a greater average total cost
E) It experiences the same equilibrium price but a lower average total cost

Correct Answer:

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