The long-run supply curve for a purely competitive industry would be horizontal when
A)an increase in product demand causes an increase in resource prices.
B)an increase in product demand causes a decrease in resource prices.
C)a decrease in product demand causes a decrease in the number of firms.
D)a decrease in product demand causes no effect in resource prices.

Question

Quizplus · Accepted Answer

In a purely competitive industry, the long-run supply curve is horizontal (perfectly elastic) when changes in product demand do not affect resource prices, indicating constant costs in the industry.

The Long-Run Supply Curve for a Purely Competitive Industry Would