Sia
Question
Macroeconomics
Posted 10 months ago
Which of the following is true about constant cost industries?
Choose 1 answer:
(A) The long-run supply curve is downward sloping.
(B) The prices of inputs used to produce a good decrease when more firms enter the industry.
(C) The supply curve for inputs used to produce this good is at least somewhat inelastic.
D The prices of inputs used to produce a good don't change when more firms enter the industry.
(E) The long-run supply curve is upward sloping.
Sign in to unlock the answer
Answer from Sia
Posted 10 months ago
Solution
a
Constant Cost Industry: In a constant cost industry, the entry or exit of firms does not affect the prices of inputs because the supply of inputs is perfectly elastic
b
Long-Run Supply Curve: For a constant cost industry, the long-run supply curve is perfectly elastic, meaning it is horizontal at the market price
Answer
(D) The prices of inputs used to produce a good don't change when more firms enter the industry.
Key Concept
Constant Cost Industry
Explanation
In a constant cost industry, the prices of inputs remain unchanged regardless of the number of firms in the industry, leading to a horizontal long-run supply curve.
Not the question you are looking for? Ask here!
Enter question by text
Enter question by image
Unlock Smarter Learning with AskSia Super!
Join Super, our all-in-one AI solution that can greatly improve your learning efficiency.
30% higher accuracy than GPT-4o
Entire learning journey support
The most student-friendly features
Study Other Question