Question: Starting from a long-run equilibrium, trace the effects of an unanticipated reduction in demand for (a) A constant-cost industry (b) An increasing-cost industry. This process

Starting from a long-run equilibrium, trace the effects of an unanticipated reduction in demand for

(a) A constant-cost industry

(b) An increasing-cost industry.

This process is just the reverse of our derivation of the supply curves in Section 9.8, but it is very good practice to think through the process.

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