As existing firms exit a decreasing-cost industry

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Question 1

Assume a perfectly competitive industry is in long-run equilibrium at a price of $150. If this industry is an increasing-cost industry and the demand for the product increases, long-run equilibrium will be reestablished at a price

◦ greater than $150.
◦ of $150.
◦ less than $150.
◦ either greater than or less than $150 depending on the magnitude of the decrease in demand.

Question 2

As existing firms exit a decreasing-cost industry

◦ the 
LRAC curve shifts down.
◦ the 
LRAC curve shifts up.
◦ the position of the 
LRAC curve doesn't change, but firms move down their 
LRAC curve.
◦ the position of the 
LRAC curve doesn't change, but firms move up their 
LRAC curve.

[Fayaz00962]

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TYSM

[Alyson.hiatt@yahoo.com]

Thanks for the timely response, appreciate it