Which of the following statements is (are) TRUE?
I. As market prices increase, industry output rises because individual firms have upward-sloping marginal cost curves.
II. As market prices increase, industry output rises because high-cost producers enter the industry.
III. As market prices increase, industry output rises because individual firms have upward-sloping short-run supply curves.

Question

Quizplus · Accepted Answer

All three statements are true. Statement I is true because firms with upward-sloping marginal cost curves will produce more as prices increase to maximize profit. Statement II is true because higher market prices can make it profitable for high-cost producers to enter the market, increasing industry output. Statement III is true because the upward-sloping short-run supply curve of a firm reflects the fact that it will supply more as prices increase, contributing to an increase in industry output.

Which of the Following Statements Is (Are) TRUE