Final answer:
In a decreasing cost industry, an increase in demand typically leads to a decrease in the cost of production due to factors like improved technology and better employee education. These industries can expand production and reduce costs simultaneously, often resulting in a lower equilibrium price as supply increases to meet the higher demand.
Step-by-step explanation:
In a decreasing cost industry, an increase in demand will cause a decrease in the cost of production for the firms. Conversely, a decrease in demand will not necessarily lead to an increase in the cost of production, as these industries have inherent characteristics that cause average total costs to fall when output is increased. This characteristic is primarily due to factors like improvement in technology or an increase in the education of employees, which enhance productivity and efficiency as the scale of production expands.
High-tech industries often exemplify a decreasing cost market because they are able to harness advances in technology and economies of scale that lead to reductions in production costs over time. As the industry grows and demand increases, these firms benefit from lower input costs, more skilled labor, and technological advancements, which can lead to a large increase in supply, causing the equilibrium price to decline.