An increasing-cost industry is the result of
A) higher resource prices that occur as the industry expands.
B) a change in the industry's minimum efficient scale.
C) X-inefficiency.
D) the law of diminishing returns.

Question

Quizplus · Accepted Answer

An increasing-cost industry is one where the costs of production increase as the industry expands due to the rising prices of resources. This means that as the demand for goods in the industry grows, resources become scarcer and their prices increase, leading to a higher cost of production. This is different from a constant-cost industry where the costs of production remain the same even as the industry expands. Choices B, C, and D are not necessarily related to increasing costs in an industry.

An Increasing-Cost Industry Is the Result of