Which one of the following factors is not an explanation of the positive relationship between market price and quantity supplied?
A) The law of diminishing returns makes it more costly for firms to expand output quickly.
B) As price increases, some less efficient firms will enter the market.
C) For most firms, unit costs decrease as output increases in the long run.
D) As all firms in an industry hire more factors of production, the prices paid for them often increase.

Question

Quizplus · Accepted Answer

In the long run, firms often experience economies of scale, where unit costs decrease as output increases, which does not explain the positive relationship between market price and quantity supplied.

Which One of the Following Factors Is Not an Explanation