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Consider two perfectly competitive industries, A and B, both operating in a state of long-run equilibrium and subject to constant returns to scale. Now let consumers' preferences change: more demand is directed to industry A and less to B. Give an explanation of what will happen (a) in the short run, and (b) in the long run. (Describe and explain the shifts that will occur in the relevant curves.)

Consider two perfectly competitive industries, A and B, both operating in a state of long-run equilibrium and subject to constant returns to scale. Now let consumers' preferences change: more demand is directed to industry A and less to B. Give an explanation of what will happen (a) in the short run, and (b) in the long run. (Describe and explain the shifts that will occur in the relevant curves.)

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter10: Prices, Output, And Strategy: Pure And Monopolistic Competition
Section: Chapter Questions
Problem 6E
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Consider two perfectly competitive industries, A and B, both operating in a state of long-run equilibrium and subject to constant returns to scale. Now let consumers' preferences change: more demand is directed to industry A and less to B. Give an explanation of what will happen (a) in the short run, and (b) in the long run. (Describe and explain the shifts that will occur in the relevant curves.) HTML Editor B IUA A I E E = E E X 三E D ¶ 1 12pt Paragrap
Transcribed Image Text:Consider two perfectly competitive industries, A and B, both operating in a state of long-run equilibrium and subject to constant returns to scale. Now let consumers' preferences change: more demand is directed to industry A and less to B. Give an explanation of what will happen (a) in the short run, and (b) in the long run. (Describe and explain the shifts that will occur in the relevant curves.) HTML Editor B IUA A I E E = E E X 三E D ¶ 1 12pt Paragrap
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