When entry and exit behavior of firms in an industry does not affect a firm's cost structure,
A)the long-run market supply curve must be horizontal.
B)the long-run market supply curve must be upward-sloping.
C)the long-run market supply curve must be downward-sloping.
D)we do not have sufficient information to determine the shape of the long-run market supply curve.

Question

Quizplus · Accepted Answer

When entry and exit behavior of firms in an industry does not affect a firm's cost structure, it implies that firms can enter or exit the market without affecting the market price. This means that firms can enter or exit without changing the quantity supplied in the market, which leads to a horizontal long-run market supply curve.

When Entry and Exit Behavior of Firms in an Industry