Economics 11th Edition by William McEachern

Exercise 13

PERFECT COMPETITION IN THE LONG RUN Draw the short-and long-run cost curves for a competitive firm in long-run equilibrium. Indicate the long-run equilibrium price and quantity.
a. Discuss the firm's short-run response to a reduction in the price of a variable resource.
b. Assuming that this is a constant-cost industry, describe the process by which the industry returns to long-run equilibrium following an increase of market demand.