Suppose the Long-Run Supply Curve for a Good Is Upward-Sloping

question 225

Multiple Choice

Suppose the long-run supply curve for a good is upward-sloping. The upward slope could be explained by

• A)increases in production costs resulting from more firms coming into the market.
• B)a breakdown of the "free entry and exit" feature of competition.
• C)a breakdown of the "price taking" feature of competition.
• D)a stable demand curve for the good, that is, a demand curve that never shifts.

---

Definitions:

Boole's Inequality

A mathematical theorem that describes the upper bound on the probability of the union of several events, emphasizing the limitations of additive probabilities.

Hindsight Bias

The tendency to believe, after learning an outcome, that one would have foreseen it, often referred to as the "I-knew-it-all-along" phenomenon.

Overconfidence Bias

A cognitive bias which leads an individual to overestimate their knowledge, abilities, or control over situations.

Selection Bias

A type of bias caused by choosing non-random data for statistical analysis, which can cause the results to not be representative of the whole population.