In a Constant-Cost Industry, an Increase in Output That Increases

question 198

Multiple Choice

In a constant-cost industry, an increase in output that increases the demand for resources used by the industry

• A) is likely to result in higher prices for at least some resources.
• B) causes the firm's cost curves to shift downward.
• C) causes the demand curve for the industry to rise.
• D) is not likely to result in higher prices for resources.

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Definitions:

Subsidy

A financial contribution granted by the government or a public body to support a business or economic sector.

Producer Surplus

The difference between the amount producers are willing to accept for a good or service versus what they actually receive.

Tax

A compulsory financial charge imposed by a government on individuals, corporations, or other entities to fund government spending and public services.

Market Price

The current price at which a good or service can be bought or sold in a marketplace, determined by supply and demand.