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.)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F95ddfa86-2f79-4448-bee5-ea54927b1293%2Fae292d87-a9f8-4290-a340-0f1bd7ee25e6%2F1zrao6t_processed.jpeg&w=3840&q=75)
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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