Suppose that the inputs used by the firms in this industry are a type of nonrenewable resource; something in relatively fixed supply such a petroleum products or some other mineral. As the industry grows in size it will demand more of this input, bidding its price up.

   In such a case, as demand increases so would production costs; and as we saw in the section on Cost Changes, this leads to new higher long run equilibrium prices. This is the same result we would have if the graph to the right shows a LRAC (long run average total cost) curve for the industry that provides inputs to the perfectly competitive industry.

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