Suppose that an industry's long-run supply curve is downsloping. This suggests that
A) it is an increasing-cost industry.
B) relevant inputs have become more expensive as the industry has expanded.
C) technology has become less efficient as a result of the industry's expansion.
D) it is a decreasing-cost industry.

Question

Quizplus · Accepted Answer

A downsloping long-run supply curve indicates a decreasing-cost industry. This means that as the industry expands, the cost of producing each unit of output falls due to economies of scale and other efficiencies. Lower costs lead to a lower price that firms are willing to sell for, which causes the long-run supply curve to slope downwards.

Suppose That an Industry's Long-Run Supply Curve Is Downsloping