In an increasing cost industry,:

Question

Quizplus · Accepted Answer

In an increasing cost industry, as industry output increases, the cost of production also increases due to the limited availability of resources such as labor and raw materials. Thus, option A is the correct choice as it reflects the cost behavior in such an industry. Option B is incorrect as costs will not rise as industry output decreases. Option C is not applicable as the long-run supply curve is typically upward sloping in an increasing cost industry. Option D is also incorrect as firms may earn subnormal or supernormal profits in the long run depending on market conditions.

In an Increasing Cost Industry