If the Long-Run Supply Curve Slopes Upward, We Know That

question 6

Multiple Choice

If the long-run supply curve slopes upward, we know that this is

• A) a decreasing-cost industry.
• B) a constant-cost industry.
• C) an increasing-cost industry.
• D) a situation in which no input prices change as firms enter and exit the industry.

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Definitions:

Overhead

The total cost of running a business that cannot be directly attributed to the production of goods or services, similar to factory overhead but can apply to non-manufacturing costs.

Overhead Allocation Base

A measure or activity, such as direct labor hours or machine hours, used to assign overhead costs to products or services.

Direct Labor Hours

The total hours worked directly on a product or service by employees in the production process.

Overhead Rate

A measure used to allocate overhead costs to produced goods, calculated by dividing total overheads by an allocation base, such as labor hours.