In a competitive, constant cost industry:
A) there is no entry or exit.
B) demand never changes.
C) supply is inelastic.
D) the long-run price is constant.

Question

Quizplus · Accepted Answer

In a competitive, constant cost industry, the long-run price is constant as firms are unable to differentiate themselves and must compete solely on price. This leads to a state of perfect competition where consumers can easily switch between suppliers, and firms cannot influence the price. Options A, B, and C are incorrect, as entry and exit may still occur, demand may still fluctuate, and supply may still be responsive to changes in price.

In a Competitive, Constant Cost Industry