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Determine the long-run linear supply function that is consistent with pre-anwr world output and price?

User Pfries
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Final answer:

In a constant-cost industry, the long-run linear supply function is a flat curve at the original price level, allowing for output increases without price changes. This is different from increasing-cost and decreasing-cost industries, where the long-run supply curves are upward and downward sloping, respectively.

Step-by-step explanation:

The long-run linear supply function for a constant-cost industry is represented by a horizontal line at the original price level, indicating that output can increase without affecting the price. This reflects the characteristic of this type of market where supply can expand to meet increased demand without price changes in the long-run equilibrium.

In contrast, the long-run supply (LRS) curve for an increasing-cost industry is upward sloping, indicating that prices will increase with the expansion of output due to rising costs. Conversely, for a decreasing-cost industry, the LRS curve is downward sloping, suggesting that prices decrease as output increases.

User Simon Ordo
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