Suppose Cookie Sales Fall as Consumers Become More Carbohydrate-Conscious

Suppose cookie sales fall as consumers become more carbohydrate-conscious. If the cookie industry is a constant-cost, perfectly competitive industry, this decline in market demand will cause market supply to:

A) decrease in the long run, resulting in a lower equilibrium price.
B) decrease in the long run until the equilibrium price is again equal to minimum average total cost.
C) increase in the long run, resulting in a higher equilibrium price.
D) increase in the long run until the equilibrium price is again equal to minimum average total cost.

Correct Answer:

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