A constant-cost industry is one in which
A) resource prices fall as output is increased.
B) resource prices rise as output is increased.
C) resource prices remain unchanged as output is increased.
D) small and large levels of output entail the same total costs.

Question

Quizplus · Accepted Answer

In a constant-cost industry, resource prices remain unchanged as output is increased. This means that there are no economies or diseconomies of scale in production, meaning that the average total cost per unit remains constant regardless of the level of output. This allows firms to expand their scale of production without facing higher costs and allows for new firms to enter the market without facing a cost disadvantage.

A Constant-Cost Industry Is One in Which