If the Long-Run Industry Supply Curve in a Perfectly Competitive

question 60

Multiple Choice

If the long-run industry supply curve in a perfectly competitive market is horizontal, what will likely happen to input prices as industry output expands?

• A) Input prices will first increase and then decrease.
• B) Input prices will increase.
• C) Input prices will remain constant.
• D) Input prices will decrease.

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Definitions:

Perfect Competition

A market structure characterized by an infinite number of small firms, homogeneous products, perfect information, and no barriers to entry or exit.

Rare Cocoa Bean

A type of cocoa bean that is uncommon or hard to find, often used in making high-quality or specialty chocolates.

Monopoly

A market structure characterized by a single seller selling a unique product with no close substitutes, leading to high control over prices.

Single Seller

A market structure in which there is only one provider of a particular good or service, often resulting in monopolistic control over the market.