When entry and exit behavior of firms in an industry does not affect a firm's cost structure,

Question

Quizplus · Accepted Answer

If entry and exit behavior of firms in an industry does not affect a firm's cost structure, it means that the costs are fixed regardless of the number of firms in the industry. In this case, the long-run market supply curve must be horizontal, as firms are willing to supply any quantity of output at a given price without affecting their costs.

When Entry and Exit Behavior of Firms in an Industry