managerial economics 61

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Consider a DECREASE in consumer demand for a product in a perfectly competitive market. Draw two diagrams side-by-side for the case of a constant cost industry, two diagrams side-by-side for the case of an increasing cost industry, and two diagrams side-by-side for the case of a decreasing cost industry (total of 6 diagrams). For each pair of side-by-side diagrams the diagram on the right-hand side should show the short run and long run impacts on demand and supply in the overall market. The diagram on the left-hand side should show the short run and long run impacts on costs and production for an individual business firm. Make sure you include a long run supply curve for each case,

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