If all firms in a market have identical cost structures and if inputs used in the production of the good in that market are readily available, then the long-run market supply curve for that good should be ?
Correct answer: D. perfectly elastic
- A. downward sloping
- B. perfectly inelastic
- C. upward sloping
- D. perfectly elastic
Explanation
Identical costs and readily available inputs imply a constant-cost industry: firms can enter without raising input prices or production costs. Its long-run supply is therefore perfectly elastic.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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