Question

Which of the following is NOT an example of a decreasing cost industry? Select one: a. the retail clothing industry b. the carpet industry in Dalton, Georgia computer technology in Silicon Valley c. d. movie production in Hollywood Question 12 Not yet answered Points out of 1 P Flag question (This question refers to the MRU video 'The Costs and Benefits of Monopoly.) Which of the following is correct? Select one: Consumer Surplus with competition+ a. Producer Surplus with competition < Producer Surplus with monopoly b. Consumer Surplus with competition < Consumer Surplus with monopoly+ Producer Surplus with monopoly Consumer Surplus with competition C. > Consumer Surplus with monopoly+ Producer Surplus with monopoly d. Consumer Surplus with competition+ Producer Surplus with competition Consumer Surplus with monopoly Producer Surplus with monopoly

Answer 1

ans=The film industry in Hollywood is not a decreasing cost industry.

The main reason for an increasing cost industry is that a rise in demand sparks off higher cost of production and an upward movement of the long-term AC curve as new firms entering the market bid up the prices of main resources. Given the constantly rising costs of film production due to costly digital production & special effects, intensely   escalating fees for actors & big marketing campaigns, its tough for the studio organizations to break even with a film, even when its a success at the box office.

Due to commercial pressure, the studio firms have started to cooperate via specializing on

particular domains like international distribution/ digital post-production.