The following graph shows possible long-run market supply curves for a perfectly competitive industry. Determine which supply curve indicates a constant-cost industry and which an increasing-cost industry.

a. Explain the difference between a constant-cost industry and an increasing-cost industry.
b. Distinguish between the long-run impact of an increase in market demand in a constant-cost industry and the impact in an increasing-cost industry.

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Dollars S2 P1 S3 Quantity