If an input necessary for production is in limited supply so that an expansion of the industry raises costs for all existing firms in the market, then the long-run market supply curve for a good could be ?
Correct answer: C. upward sloping
- A. perfectly inelastic
- B. perfectly elastic
- C. upward sloping
- D. downward sloping
Explanation
When a scarce input becomes more expensive as the industry expands, firms face rising costs, producing an upward-sloping long-run supply curve. This is called an increasing-cost industry.
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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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