Asked by Paige Gratton on May 31, 2024
Verified
Refer to Figure 8.8.2 above. Starting with the increase in demand, the cost and supply curves will shift, indicating that this is:
A) A constant-cost industry.
B) An increasing-cost industry.
C) A decreasing-cost industry.
D) A monopolistic industry.
Cost And Supply Curves
Graphical representations that show how the cost of producing a good and the quantity supplied vary with quantity produced.
Constant-Cost Industry
An industry in which the costs of production do not change as the industry's output changes.
Increasing-Cost Industry
An industry in which the costs of production increase as output expands, often due to factors like resource depletion or higher input prices.
- Identify and illustrate the divergences between constant-cost, increasing-cost, and decreasing-cost industries and their impact on the equilibrium of the market.
Verified Answer
MR
Melissa RamosJun 01, 2024
Final Answer :
B
Explanation :
The increase in demand causes the price to increase, resulting in an increase in the quantity supplied. As the quantity supplied increases, the cost of producing each unit increases due to diminishing returns. As a result, the supply curve shifts upwards to represent the higher cost of production. This indicates an increasing-cost industry.
Learning Objectives
- Identify and illustrate the divergences between constant-cost, increasing-cost, and decreasing-cost industries and their impact on the equilibrium of the market.