When LCD televisions first came on the market, they sold for at least $1,000, and some for much more. Now many units can be purchased for under $400. These facts imply that
A) the LCD television industry was once competitive but is now monopolistic.
B) fewer firms produce LCD televisions than was the case five or ten years ago.
C) the demand curve for LCD televisions has shifted leftward.
D) the LCD television industry is a decreasing-cost industry.

Question

Quizplus · Accepted Answer

The decreasing prices of LCD televisions imply that the industry is a decreasing-cost industry. This means that as firms produce more units, their production costs decrease, allowing them to lower prices and still make a profit. This is a characteristic of a competitive market with many producers.

When LCD Televisions First Came on the Market, They Sold