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Problem: Assume a purely competitive constant-cost industry is initially in long-run equilibrium, producing 12 million units at a market price of $6. Suppose that an increase in consumer demand occurs. After all economic adjustments have been completed, which output and price combination is most likely to occur?
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Law of Demand indicates that there is the inverse relationship between price and quantity, why does it matter which particular mix of price and quantity is selected?
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