-Figure 9-12 Shows Three Possible Long-Run Supply Curves for an Industry

question 119

Multiple Choice

-Figure 9-12 shows three possible long-run supply curves for an industry that is currently in equilibrium with price (P*) and quantity (Q*) .Which of the following statements is correct?

• A)The long-run supply curve would be F for a decreasing-cost industry,H for an increasing-cost industry,and G for a constant-cost industry.
• B)All three long-run supply curves indicate that the firms' LRATC curves shift as industry output expands.
• C)If the industry uses a significant portion of a scarce input,the long-run supply curve would likely be curve H.
• D)An industry that moves along long-run supply curve F earns above-normal profits in the long run.
• E)If an increase in market output leads to lower prices for a key input,the long-run supply curve would likely be curve H.

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Definitions:

Fully Depreciated

A state where an asset has reached the end of its useful life for accounting purposes, with its cost fully allocated to depreciation expense over its useful life.

Common Stock

A form of corporate equity ownership, a type of security representing an ownership share in a corporation.

Cash Payments

Transactions where cash is exchanged for goods, services, or to settle an obligation.

Cash Dividends

A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders in the form of cash.