A constant-cost industry is one in which
A) a higher price per unit will not result in an increased output.
B) if 100 units can be produced for $100, then 150 can be produced for $150, 200 for $200, and so forth.
C) the demand curve and therefore the unit price and quantity sold seldom change.
D) the total cost of producing 200 or 300 units is no greater than the cost of producing 100 units.

Question

Quizplus · Accepted Answer

In a constant-cost industry, the cost of producing each unit remains the same regardless of the quantity produced. Therefore, if 100 units can be produced for $100, then 150 can be produced for $150, 200 for $200, and so forth. Option A is incorrect because in a constant-cost industry, a higher price per unit may lead to an increased output. Option C is incorrect because the demand curve and unit price may still vary based on factors like changes in consumer preferences, input prices, and competition. Option D is incorrect because the total cost of producing 200 or 300 units may be greater than the cost of producing 100 units if the industry experiences diminishing returns or increasing input costs.

A Constant-Cost Industry Is One in Which