As output quantities expand in an industry with a downward-sloping long-run industry supply curve, what is the most likely long-run effect on the equilibrium selling price per unit of the industry’s output?
An industry with a downward-sloping long-run industry supply curve is a decreasing- cost industry. In such an industry, input costs decrease as output quantities increase. In the short run, this causes firms to earn economic profits. In the long run, these economic profits attract new entrants to the industry, which reduces the equilibrium selling price of the industry’s output.