In a Constant-Cost Industry, an Increase in Demand Will Be

question 71

Multiple Choice

In a constant-cost industry, an increase in demand will be followed by:

• A) no increase in supply.
• B) an increase in supply that will not change price from the higher level that occurs after the demand shift.
• C) an increase in supply that will bring price down to the level it was before the demand shift.
• D) an increase in supply that will bring price down below the level it was before the demand shift.
• E) a decrease in demand to keep price constant.

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Definitions:

Marginal Cost Curve

A graphical representation showing how the cost of producing one more unit of a good changes as production levels vary.

Output

The quantity of goods or services produced by a business, industry, or economy.

Long Run

Period in which all inputs or factors of production can be varied, and all costs are variable, allowing companies to adjust to changes in market demand or production capabilities.

Average Costs

A calculation that determines the cost of producing one unit of goods by averaging the total production costs.