A constant-cost industry is an industry in which
A)average costs fall as the industry expands output.
B)average costs rise as the industry expands output.
C)average costs remain constant as the industry expands output.
D)input prices rise at a constant rate as firms in the industry use more inputs.

Question

Quizplus · Accepted Answer

In a constant-cost industry, as the industry expands output, input prices remain constant, allowing firms to maintain the same level of average costs. This is because the production process is not affected by the increase in industry output. As a result, the industry supply curve is horizontal, and firms can enter and exit the market without affecting input prices or average costs.

A Constant-Cost Industry Is an Industry in Which