Question

Assume a purely competitive increasing-cost industry is initially in long-run equilibrium and that an increase in consumer demand occurs. After all economic adjustments have been completed, product price will be_____.

Answer 1

The price of the product will increase and then the quantity of the output will also be more than the original one.

Explanation:

In a market which is purely competitive, with the increase in the demand of the particular good in the market, the price of the good will also increase because of the increase in the demand by the consumers. After making the adjustments, the quantity will therefore also increase of the output than the original one.