Because only greater quantities of oil can be produced by using more expensive production methods, the industry is:
A) an increasing cost industry.
B) an economies of scale industry.
C) noncompetitive industry.
D) marginal cost industry.

Question

Quizplus · Accepted Answer

An increasing cost industry is characterized by the fact that it becomes more expensive to produce additional units of output. This is the case with the oil industry as only greater quantities of oil can be produced by using more expensive production methods, such as fracking or deep-water drilling.

Because Only Greater Quantities of Oil Can Be Produced by Using