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The market for gasoline is perfectly competitive and begins in long-run equilibrium. Suppose that demand for gas rises. Compared to its initial long-run equilibrium value,

The market for gasoline is perfectly competitive and begins in long-run equilibrium. Suppose that demand for gas rises. Compared to its initial long-run equilibrium value, what happens tothe profitsearned by a single firm when the market settles into the newshort-run equilibrium? Assume that this is a constant cost industry.

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Decrease.

Not enough information to say.

Increase.

Unchanged.

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