If an industry's long-run supply curve is upward sloping, the industry is characterized by:Question 50Select one:a.increasing cost.b.decreasing cost.c.constant cost.d.high overhead cost.
Question
If an industry's long-run supply curve is upward sloping, the industry is characterized by:Question 50Select one:a.increasing cost.b.decreasing cost.c.constant cost.d.high overhead cost.
Solution
The answer is a. increasing cost.
Here's why:
An industry's long-run supply curve is a graphical representation that shows the relationship between the price of a good or service and the quantity of that good or service that a firm is willing to produce and sell, assuming all its inputs are variable in the long run.
If the long-run supply curve is upward sloping, it means that as the quantity produced increases, the price also increases. This is characteristic of an increasing cost industry.
In an increasing cost industry, as the scale of production increases, the cost of production also increases. This could be due to factors such as the rising cost of inputs as production expands, diminishing returns to scale, or increased costs due to regulatory or logistical challenges associated with larger scale production.
Therefore, if an industry's long-run supply curve is upward sloping, the industry is characterized by increasing cost.
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