Figure 8.8.2
-Refer to Figure 8.8.2 above. Starting with the increase in demand, the cost and supply curves will shift, indicating that this is:
A) A constant-cost industry.
B) An increasing-cost industry.
C) A decreasing-cost industry.
D) A monopolistic industry.

Question

Figure 8.8.2
-Refer to Figure 8.8.2 above. Starting with the increase in demand, the cost and supply curves will shift, indicating that this is:
A) A constant-cost industry. 
B) An increasing-cost industry. 
C) A decreasing-cost industry. 
D) A monopolistic industry.

Quizplus · Accepted Answer

The increase in demand causes the price to increase, resulting in an increase in the quantity supplied. As the quantity supplied increases, the cost of producing each unit increases due to diminishing returns. As a result, the supply curve shifts upwards to represent the higher cost of production. This indicates an increasing-cost industry.

Figure 8.8.2 -Refer to Figure 8.8.2 Above. Starting with the Increase in Increase