Sia
Question
Microeconomics
Posted 9 months ago
Walrus hats are sold in a perfectly competitive industry and its long-run supply curve slopes upward.
What can be concluded based on this information?
Choose 1 answer:
A This is an increasing cost industry.
B This is a decreasing cost industry.
(C) This is a diminishing cost industry.
(D) This is a constant cost industry.
(E) This is a parabolic cost industry.
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Answer from Sia
Posted 9 months ago
Solution
a
Definition of Perfect Competition: In a perfectly competitive industry, there are many firms selling identical products, and no single firm can influence the market price
b
Long-Run Supply Curve: The long-run supply curve in a perfectly competitive market can slope upward, indicating that as the industry expands, the costs of production increase
c
Increasing Cost Industry: An upward-sloping long-run supply curve is characteristic of an increasing cost industry, where the entry of new firms raises the costs of inputs due to higher demand
Answer
A This is an increasing cost industry.
Key Concept
Increasing Cost Industry
Explanation
In a perfectly competitive industry, an upward-sloping long-run supply curve indicates that as the industry grows, the costs of production increase due to higher input prices. This is known as an increasing cost industry.
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