The long-run supply curve under pure competition will be
A)downward-sloping in a decreasing-cost industry and upward-sloping in an increasing-cost industry.
B)horizontal in a constant-cost industry and downward-sloping in an increasing-cost industry.
C)vertical in a constant-cost industry and upward-sloping in a decreasing-cost industry.
D)upward-sloping in an increasing-cost industry and vertical in a constant-cost industry.

Question

Quizplus · Accepted Answer

In the long run, firms can enter or exit the industry, so the supply curve will shift to the right or left until the equilibrium price is equal to the minimum average total cost. In a decreasing-cost industry, the minimum average total cost falls as output increases, so the long-run supply curve will be downward-sloping. In an increasing-cost industry, the minimum average total cost rises as output increases, so the long-run supply curve will be upward-sloping.

The Long-Run Supply Curve Under Pure Competition Will Be