A. The Long-Run Adjustment to Higher Demand
Explanation

Each panel starts from the same long-run equilibrium where D₁ meets S₁ at Q₁. Demand then rises to D₂, price and profits rise, and new firms enter until profits are back to zero, shifting supply to S₂. The line through the two long-run equilibria is the long-run supply (LRS) curve.

In a constant-cost industry (a) entry expands supply exactly as much as demand rose, so the price returns to where it was and LRS is flat. In an increasing-cost industry (b) inputs become scarcer as the industry grows, supply shifts by less than demand, and the price settles higher: LRS slopes up. In a decreasing-cost industry (c) growth lowers costs, supply shifts by more than demand, and the price settles lower: LRS slopes down. The sliders set the demand shift and how far supply shifts in (b) and (c).

Shifts