There are 100 identical demanders of product y, and the demand function for each individual is y = 10 - p. The production function for any firm is y = min(z₁,z₂). If the prices of z₁and z₂depend on aggregate input requirements in the following way: w₁= z₁/200, w₂= z₂/200, then: A)this is a decreasing cost industry. B)this is a declining industry. C)this is a constant cost industry. D)this is an increasing cost industry.

Question

Quizplus · Accepted Answer

The prices of inputs z1 and z2 increase with aggregate input requirements, indicating that costs increase as production increases, characteristic of an increasing cost industry.

There Are 100 Identical Demanders of Product Y, and the Demand