If, as a Perfectly Competitive Industry Expands, It Can Supply

question 254

Multiple Choice

If, as a perfectly competitive industry expands, it can supply larger quantities only at a higher long-run equilibrium price, it is

• A)a constant-cost industry.
• B)an increasing-cost industry.
• C)a decreasing-cost industry.
• D)a fixed-cost industry.

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Definitions:

Supply

The total amount of a specific good or service that is available to consumers at a given price level and over a specific period.

Positive Externalities

Benefits received by third parties who are not directly involved in a transaction or activity, leading to potentially under-produced goods or services in a free market.

Market Equilibrium

The state in which market supply and demand balance each other, resulting in stable prices.

Social Value

The importance or worth of something in terms of its contribution to society or the community.