Suppose that, in the long run, the price of feature films rises as the movie production industry expands. We can conclude that movie production is a/an:
A) increasing-cost industry.
B) constant-cost industry.
C) decreasing-cost industry.
D) marginal-cost industry.

Question

Quizplus · Accepted Answer

In an increasing-cost industry, the cost of production increases as industry output expands. As the movie production industry expands, it is likely that the costs of producing feature films, which include costs associated with equipment, talent, and marketing, will also increase. Therefore, if the price of feature films rises, we can conclude that movie production is an increasing-cost industry.

Suppose That, in the Long Run, the Price of Feature