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:

Question

Quizplus · Accepted Answer

In the short run, the industry supply curve will be upward sloping because the increasing average total cost will require a higher price to cover the costs of production. However, in the long run, firms can enter or exit the industry, allowing for adjustments in the number of firms and the use of more efficient production methods. As a result, the industry supply curve will become more elastic and have a positive slope.

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