If input prices for a perfectly competitive industry remain constant as the output of the industry expands in the long run, the industry supply curve will:
A) have a positive slope.
B) have a negative slope.
C) be perfectly horizontal.
D) be perfectly vertical.

Question

Quizplus · Accepted Answer

If input prices remain constant and the industry is perfectly competitive, firms will continue to enter the market in the long run as profits are being made. This will result in an expansion of industry output without affecting input prices. As a result, the industry supply curve will be perfectly horizontal because any increase in demand can be met with an increase in output without affecting prices.

If Input Prices for a Perfectly Competitive Industry Remain Constant