If input prices for a perfectly competitive firm increase as the output of the industry expand in the long run, the long-run 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

As input prices increase, the cost of production for firms in the industry will increase. In the short run, some firms may exit the industry due to the increased costs, resulting in a decrease in industry output. However, in the long run, new firms may enter the industry to take advantage of the higher prices and potential profits. This increase in industry output with higher input prices will result in a positive sloping long-run industry supply curve.

If Input Prices for a Perfectly Competitive Firm Increase as the Output