Describe the graph for a long-run supply curve in an increasing-cost industry. Why does it have this slope?
What will be an ideal response?
For the graph, quantity or output for the industry will be on the horizontal axis and price will be on the vertical axis. The slope of the graph for a long-run supply curve in an increasing-cost industry will be up sloping. It shows that shows that an increase in the level of output is associated with an increase in the price of the product. The reason for the upward slope is that as firms increase output, they bid up resource prices, and this increases the minimum average total cost of the product.
You might also like to view...
According to this Application, because Argentina pegged its currency to the U.S. dollar, the appreciation of the dollar caused a large trade deficit in Argentina. This trade deficit meant that
A) the demand for Argentinean pesos exceeded the supply of the pesos. B) the demand for Argentinean pesos exceeded the supply of U.S. dollars. C) the supply of Argentinean pesos exceeded the demand for the pesos. D) the supply of Argentinean pesos exceeded the demand for U.S. dollars.
Isoquants are convex to the origin due to:
A) the law of diminishing marginal utility. B) the assumption of the diminishing marginal productivity of each input. C) the fact that as less capital is used, its marginal productivity falls. D) the fact that as more labor is used, its marginal productivity rises.