Asked by Libby Burchett on Jun 20, 2024
Verified
An increasing-cost industry is associated with:
A) a perfectly elastic long-run supply curve.
B) an upsloping long-run supply curve.
C) a perfectly inelastic long-run supply curve.
D) an upsloping long-run demand curve.
Increasing-Cost Industry
An industry in which expansion through the entry of new firms raises the prices firms in the industry must pay for resources and therefore increases their production costs.
Long-Run Supply Curve
As it applies to macroeconomics, a supply curve for which price, but not real output, changes when the demand curves shifts; a vertical supply curve that implies fully flexible prices.
Perfectly Elastic
Describes a situation in which the quantity demanded or supplied changes infinitely with any change in price.
- Define the traits and impacts of constant-cost, increasing-cost, and decreasing-cost industries.
Verified Answer
MH
Marissa HinojosJun 21, 2024
Final Answer :
B
Explanation :
An increasing-cost industry is one in which the cost per unit of output increases with the expansion of industry output in the long run. This is due to limited resources and increased competition for these resources. As a result, firms must pay higher prices for inputs, which increases their costs and thus their prices. Therefore, an increasing-cost industry is associated with an upsloping long-run supply curve.
Learning Objectives
- Define the traits and impacts of constant-cost, increasing-cost, and decreasing-cost industries.