If the long-run supply curve of a purely competitive industry slopes upward, this implies that the prices of relevant resources
A) will fall as the industry expands.
B) are constant as the industry expands.
C) rise as the industry contracts.
D) rise as the industry expands.

Question

Quizplus · Accepted Answer

An upward sloping long-run supply curve of a purely competitive industry indicates that as the industry expands, the prices of relevant resources (such as labor and raw materials) will also increase, causing an increase in the cost of production for firms. This leads to a higher equilibrium price for the industry as a whole. Therefore, option D – rise as the industry expands – is the correct answer.

If the Long-Run Supply Curve of a Purely Competitive Industry