A Constant-Cost Industry Is an Industry in Which

question 112

Multiple Choice

A constant-cost industry is an industry in which

• A)average costs fall as the industry expands output.
• B)average costs rise as the industry expands output.
• C)average costs remain constant as the industry expands output.
• D)input prices rise at a constant rate as firms in the industry use more inputs.

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Definitions:

Excess Reserves

Banks' reserves that exceed the minimum requirement set by a central bank, not lent out and often kept for emergency purposes.

Reserve Requirement

The minimum amount of reserves that banks must hold against deposits, as mandated by central banks.

Fractional Reserve

A banking system in which only a fraction of bank deposits are backed by actual cash on hand, with the rest being available for loans.

Banking System

The network of banks and financial institutions that provide financial services to consumers, businesses, and other banks.