In a decreasing-cost industry, the entry of new firms lowers average cost at each level of output.

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In a decreasing-cost industry, new firms entering the market can benefit from economies of scale and can reduce the cost of production, leading to lower average costs at each level of output. This is because as the industry grows, there is increasing availability of specialized labor and equipment, better access to raw materials, and improved technology, which can help to reduce costs. This, in turn, can lead to increased competition and lower prices for consumers, making the industry more attractive for new firms to enter.

In a Decreasing-Cost Industry, the Entry of New Firms Lowers