In a perfectly competitive industry, assume the short-run average total cost increases as the output of the industry expands. In the long run, the industry supply curve will:

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In the short run, as the output expands, the average total cost increases. This means that the firms in the industry are facing diminishing returns to their inputs. As a result, they will eventually reach a point where they cannot increase output any further without incurring higher costs. In the long run, firms can adjust their inputs and processes to become more efficient, but if the industry supply curve had a perfectly horizontal slope, it would mean that firms could produce an infinite amount of output at a constant cost, which is not a realistic assumption. Therefore, the industry supply curve in the long run will have a positive slope, meaning that as output expands, the cost of production also increases.

In a Perfectly Competitive Industry, Assume the Short-Run Average Total