The resource cost falls in a purely competitive industry. This change will result in a(n)
A)increase in marginal cost for firms in the industry and an increase in the industry supply curve.
B)decrease in marginal cost for firms in the industry and a decrease in the industry supply curve.
C)decrease in marginal cost for firms in the industry and an increase in the industry supply curve.
D)increase in marginal cost at each output level for firms in the industry and an increase in the industry supply curve.

Question

Quizplus · Accepted Answer

A decrease in resource cost lowers the marginal cost for firms, making production more efficient. This leads to an increase in the industry supply curve as firms can supply more at each price level.

The Resource Cost Falls in a Purely Competitive Industry