If there are constant returns to scale in a competitive industry, then the long-run industry supply curve for that industry is horizontal.

Question

Quizplus · Accepted Answer

If there are constant returns to scale, then firms can expand production without affecting the average cost of production, which means that they can enter or exit the market without changing the market price. Therefore, in the long run, the supply curve will be perfectly elastic (horizontal) at the minimum average cost of production.

If There Are Constant Returns to Scale in a Competitive