The long-run supply curve is
A) a horizontal line for a constant-cost industry.
B) upward sloping for a decreasing-cost industry.
C) downward sloping for an increasing-cost industry.
D) all of the above.

Question

Quizplus · Accepted Answer

The long-run supply curve is a horizontal line for a constant-cost industry because firms can enter or exit the market without affecting the price or cost of production. For decreasing-cost industries, the long-run supply curve is upward sloping as new entrants will experience lower costs of production, leading to an increase in quantity supplied at any given price. In contrast, for increasing-cost industries, the long-run supply curve is downward sloping due to rising costs of production as new firms enter the market. However, since the question asks for the long-run supply curve in general, the best choice is A.

The Long-Run Supply Curve Is