In a constant- cost industry:
A)the firm's TC curve is linear.
B)the short run market supply curve is fixed as firms enter or exit.
C)the long run supply curve is horizontal.
D)the short run market supply curve is horizontal.

Question

Quizplus · Accepted Answer

In a constant-cost industry, the long run supply curve is horizontal because firms can always enter or exit the market without affecting the cost of production for all firms in the industry. As a result, the industry can expand or contract without any significant change in the cost of production. However, the short run market supply curve is upward sloping as firms must increase production and incur higher costs in order to meet increased demand. Therefore, choices A, B, and D are incorrect.

In a Constant- Cost Industry