A constant cost industry is one in which:
A) an increase in overall industry output does not lead to an increase in overall industry costs.
B) costs are constant across all firms in the industry.
C) market price is always equal to marginal cost in the industry.
D) there are only a limited number of suppliers, all with equal costs of production.

Question

Quizplus · Accepted Answer

In a constant cost industry, an increase in overall industry output does not lead to an increase in overall industry costs. This is because factors of production, such as labor and materials, can be easily obtained without driving up their prices. As a result, firms can produce more without facing higher costs.

A Constant Cost Industry Is One in Which