Downward sloping long-run supply curves occur in markets

Question

Quizplus · Accepted Answer

Long-run supply curves can be downward sloping in markets with learning-by-doing or increasing returns to scale. In markets with learning-by-doing, firms gain efficiency and reduce their costs as they produce more output, causing the long-run supply curve to slope downward. In markets with increasing returns to scale, firms experience cost advantages as they increase their production levels due to economies of scale, also causing the long-run supply curve to slope downward. Therefore, the best choice is D, as both A and B are possible reasons for downward sloping long-run supply curves.

Downward Sloping Long-Run Supply Curves Occur in Markets