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2. Describe the long-run supply curve for a firm. a. What do we call an industry...

2. Describe the long-run supply curve for a firm. a. What do we call an industry whose long-run supply curve is downsloping? b. What do we call an industry whose long-run supply curve is upsloping? c. What do we call an industry whose long-run supply curve is flat?

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Answer #1

(a) An industry whose long-run supply curve is downward-sloping, experiences a decrease in average total cost as its output increases, therefore it is called a decreasing-cost industry.

(b) An industry whose long-run supply curve is upward-rising, experiences an increase in average total cost as its output increases, therefore it is called an increasing-cost industry.

(c) An industry whose long-run supply curve is horizontal, experiences a constant average total cost as its output increases, therefore it is called a constant-cost industry.

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