One explanation for the existence of an increasing-cost industry is that
A) increasing marginal returns to labor occur.
B) firms produce beyond the point of minimum long-run average total costs.
C) perfectly elastic long-run supply schedules are observed in the industry.
D) as the industry expands, prices are bid up for some factors of production.

Question

Quizplus · Accepted Answer

As the industry expands, prices are bid up for some factors of production, leading to an increase in the average cost of production for all firms in the industry.

One Explanation for the Existence of an Increasing-Cost Industry Is