Question

Which of the following are characteristics of an increasing cost industry?

Select the correct answer below:

a) the long-run supply curve is upward sloping.

b) an increase in demand is met with lesser increase in supply.

c) the equilibrium price increases in response to an increase in quantity.

d) all of the above.

Answer 1

Answer

Option d

all of these

The increasing cost of indutry has an upward-sloping supply curve as the average cost of industry is increasing because the inputs cost increases as the new firms enter the market . The firms can increase output but increase prices so the less increase in supply also met the demand because at higher prices there is less demand.