What condition is necessary in a constant cost industry?
A) Prices of the industry's inputs do not change as the industry expands.
B) Prices of the industry's inputs decline as the industry expands.
C) Prices of the industry's inputs rise as the industry expands.
D) There are barriers that prevent new firms from entering such an industry.

Question

Quizplus · Accepted Answer

In a constant cost industry, the prices of the industry's inputs do not change as the industry expands. This means that the costs of production remain constant even as the industry increases output. This allows firms to expand without facing increasing costs and helps to ensure that prices in the market remain stable. If input prices were to rise or fall as the industry expands, this would result in either increasing or decreasing costs of production, which would affect the overall structure of the industry.

What Condition Is Necessary in a Constant Cost Industry