If Input Prices for a Perfectly Competitive Firm Increase as the Output

question 74

Multiple Choice

If input prices for a perfectly competitive firm increase as the output of the industry expands in the long run, the long-run industry supply curve will:

• A) have a constant slope.
• B) have a negative slope.
• C) be perfectly horizontal.
• D) have a positive slope.

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Definitions:

Differential Analysis

A decision-making process that focuses on the costs and benefits that change between decision alternatives.

Differential Costs

The difference in cost between two alternative decisions, or changes in cost that result from choosing one option over another.

Equipment Replacement

The process of buying new equipment to replace old or outdated machinery to maintain or improve operational efficiency.

Useful Life

The estimated duration of time that an asset is expected to be economically usable by an entity, affecting its depreciation calculation.