Problem
Perfect Competition in the Long Run Draw the short and long-run cost curves for a competitive firm in long-run equilibrium. Indicate the long-run equilibrium price and quantity.
a. Discuss the firm's short-run response to a reduction in the price of a variable resource.
b. Assuming that this is a constant-cost industry, describe the process by which the industry returns to long-run equilibrium following a change in market demand.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.