How is the hotel/touristic industry?

How would an industry adjust in a perfect competition to the following issues? in the long run?

  • 1 if there was a increase in the cost of raw material how would a industry adjust following the increase which would affect all the firms in that industry? 2. if there was a rise in demand how would a industry adjust following the increase in demand which would affect all the firms in the industry?? Please Explain in detail with understanding thankyou so much for your help? ASAP!!!!

  • Answer:

    1. MC increases, SR profit goes down, LR firms leave 2. MR increases, SR profit goes up, LR firms enter

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