increase in production cost as an upward shift of both average and marginal cos curves). 2. Assume a constant-cost industry under perfect competition. 'A fall in demand fo the good would not affect the market price in the long-run.' True or false? Explain your answer intuitively and graphically. (5/40) Would your answer change if it is an increasing-cost industry instead? Explain your answer intuitively and graphically. (5/40) (Hint: start your analysis from a long-run competitive equilibrium in both cases) 3. 'Given the factor prices, cost-minimization implies higher total production cost for more output.' Assume two factors of production (K and L) only. Explain the above statement with cost-minimization model graphically. (10/40; hint: consider long-run only)