Figure 6.5 -Figure 6.5 Shows the Short-Run and Long-Run Effects of an of an Increase

question 36

Multiple Choice

Figure 6.5
-Figure 6.5 shows the short-run and long-run effects of an increase in demand of an industry. The industry is

• A) a constant-cost industry.
• B) an increasing-cost industry.
• C) a decreasing-cost industry.
• D) There isn't sufficient information.

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Definitions:

Specialization

A process wherein individuals or businesses focus on producing a limited range of goods or services to gain greater efficiency and productivity.

Trade

The swapping of goods, services, or both among two or more entities.

Opportunity Cost

The loss incurred from potential opportunities when one choice is made over others.

Absolute Advantage

A condition where a country, entity, or individual can produce a good or service more efficiently than competitors using the same amount of resources.