The long-run market supply curve in the presence of internal economies of scale is ________, and in the presence of external economies of scale, it is ________.
A) horizontal; upward sloping
B) downward sloping; downward sloping
C) upward sloping; downward sloping
D) upward sloping; horizontal
E) downward sloping; horizontal

Question

Quizplus · Accepted Answer

Internal economies of scale lead to a downward sloping long-run market supply curve because as firms in the industry grow, their costs decrease, leading to lower prices. External economies of scale also result in a downward sloping curve because as the industry as a whole expands, it can drive down costs for all firms, again leading to lower prices.

The Long-Run Market Supply Curve in the Presence of Internal