a good example of a decreasing cost market.

Figure 8.8 (a) presents the case of an adjustment process in a constant-cost industry. Whenever there are

output expansions in this type of industry, the long-run outcome implies more output produced at exactly the

same original price. Note that supply was able to increase to meet the increased demand. When we join the

before and after long-run equilibriums, the resulting line is the long run supply (LRS) curve in perfectly

competitive markets. In this case, it is a flat curve. Figure 8.8 (b) and Figure 8.8 (c) present the cases for an

increasing cost and decreasing cost industry, respectively. For an increasing cost industry, the LRS is upward
sloping, while for a decreasing cost industry, the LRS is downward sloping.

FIGURE 8.8 Adjustment Process in a Constant-Cost Industry In (a), demand increased and supply met it. Notice
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