If the firms in a market have constant returns to scale internally while there are external economies of scale for the industry,a firm's long- run supply curve will be _ and the long- run market supply curve will be .
A)horizontal; downward sloping
B)upward sloping; downward sloping
C)downward sloping; downward sloping
D)upward sloping; horizontal
E)downward sloping; horizontal

Question

Quizplus · Accepted Answer

A firm's long-run supply curve will be horizontal due to constant returns to scale internally, while the market supply curve will be downward sloping due to external economies of scale.

If the Firms in a Market Have Constant Returns to Scale