One explanation for the existence of an increasing-cost industry is that
A)increasing marginal returns to labor occur.
B)firms produce beyond the point of minimum long-run average total costs.
C)perfectly elastic long-run supply schedules are observed in the industry.
D)as the industry expands, prices are bid up for some factors of production.

Question

Quizplus · Accepted Answer

An increasing-cost industry experiences higher costs as it expands, primarily because the prices for some factors of production increase. This can happen due to higher demand for these inputs as the industry grows, leading to increased competition for limited resources, which in turn drives up prices.

One Explanation for the Existence of an Increasing-Cost Industry Is