Asked by genevieve yaldoo on Jul 15, 2024
Verified
If the entry or exit of firms does not affect the resource prices in an industry, we refer to it as a
A) fixed-price industry.
B) price-controlled industry.
C) constant-cost industry.
D) price-taking industry.
Constant-cost Industry
An industry in which the costs of production or the prices of inputs do not change as the industry expands or contracts.
Entry or Exit
The process of a firm beginning operations in a market (entry) or leaving a market (exit), influenced by factors like profitability and barriers to entry.
- Identify the characteristics and outcomes of constant-cost, increasing-cost, and decreasing-cost industries in the long run.
Verified Answer
DN
Darren NocettiJul 19, 2024
Final Answer :
C
Explanation :
In a constant-cost industry, the entry or exit of firms does not affect the prices of resources, meaning that the cost of production remains constant even as the industry size changes. This is because the supply of resources is perfectly elastic, accommodating any change in demand from the industry without changing the price.
Learning Objectives
- Identify the characteristics and outcomes of constant-cost, increasing-cost, and decreasing-cost industries in the long run.