Asked by Kathryn Turner on May 16, 2024
Verified
An increasing-cost industry is the result of
A) higher resource prices that occur as the industry expands.
B) a change in the industry's minimum efficient scale.
C) X-inefficiency.
D) the law of diminishing returns.
Increasing-cost Industry
An industry in which the cost of production increases as the industry's output expands, often due to resource limitations or rising input prices.
Resource Prices
Resource prices are the costs associated with the inputs used in the production process, such as raw materials, labor, and capital.
Industry Expands
This phrase describes the process where the total output or the number of firms in a given industry increases due to factors such as innovation, increased demand, or favorable policies.
- Understand the traits and results of industries characterized by constant costs, escalating costs, and diminishing costs.
Verified Answer
BE
Brooke EloraMay 19, 2024
Final Answer :
A
Explanation :
An increasing-cost industry experiences higher resource prices as it expands, leading to an increase in costs. This is often due to the increased demand for resources within the industry, which drives up prices.
Learning Objectives
- Understand the traits and results of industries characterized by constant costs, escalating costs, and diminishing costs.