Which of the following is true of a constant cost industry?
A)Along the industry's long-run supply curve,firms in the industry earn a positive economic profit.
B)The long-run supply curve for a constant cost industry is horizontal.
C)The industry's long-run supply curve is derived by horizontally summing the long-run supply curves of the individual firms.
D)In the long run,the industry experiences an increase in the price of inputs.

Question

Quizplus · Accepted Answer

In a constant cost industry, the cost of production does not change as industry output increases or decreases. Therefore, the long-run supply curve for a constant cost industry is horizontal because firms can produce any amount of output at the same cost. The other options are incorrect as firms in a constant cost industry earn zero economic profit in the long run (option A), the industry's long-run supply curve is not derived by horizontally summing the long-run supply curves of individual firms (option C), and there is no increase in the price of inputs in the long run (option D).

Which of the Following Is True of a Constant Cost