One explanation for the existence of an increasing-cost industry is that
A)increasing marginal returns to labor occur.
B)firms produce beyond the point of minimum long-run average total costs.
C)perfectly elastic long-run supply schedules are observed in the industry.
D)as the industry expands, prices are bid up for some factors of production.

Question

Quizplus · Accepted Answer

As the industry expands, the demand for certain factors of production increases, leading to higher prices for these inputs, which in turn raises production costs for firms in the industry.

One Explanation for the Existence of an Increasing-Cost Industry Is