Suppose Bicycles Are Produced by a Competitive Constant-Cost Industry,which Is

Essay

Suppose bicycles are produced by a competitive constant-cost industry,which is initially in a long-run equilibrium.For each of the following situations,design a supply-demand diagram that shows how market price and quantity will be affected in both the short run and the long run.In your diagrams,show the short-run supply,long-run supply,and demand curves,along with any shifts in these curves.Label the initial long-run equilibrium E₀,the new short-run equilibrium E₁,and the new long-run equilibrium E₂.