Asked by Seema AlHiraki on Jul 30, 2024
Verified
Give two reasons why the long-run industry supply curve may slope upward. Use an example to demonstrate your reasons.
Industry Supply Curve
A graphical representation that shows the quantity of goods that all producers in an industry are willing and able to supply at different price levels.
Upward Slope
A line on a graph that displays a positive relationship between two variables, indicating that as one variable increases, the other variable also increases.
- Understand conditions under which the long-run supply curve can be perfectly elastic or slope upward.
Verified Answer
ZK
Zybrea KnightAug 05, 2024
Final Answer :
1) Some resource used in production may be available only in limited quantities. 2) Firms may have different cost structures. The example provided in the text for the first reason is the market for farm products. As more people become farmers, the price of land is bid up since its supply is limited. As the price of farm land is bid up, the costs to all farmers in the market rise. The example used to support the second reason is the market for painters. Anyone can enter the market for painting services, but not everyone has the same costs because some painters work faster than others.
Learning Objectives
- Understand conditions under which the long-run supply curve can be perfectly elastic or slope upward.
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