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According to the source, agricultural markets are generally good examples of which type of industry, where an elastic supply of inputs keeps production costs from rising as the industry expands?
AA decreasing cost industry
BA monopolistic industry
CA constant cost industry
DAn increasing cost industry
Answer & Solution
Correct answer: C. A constant cost industry
1. A constant cost industry is one where costs of production stay the same as the market expands.
2. This happens when firms can easily supply more output and easily increase their use of inputs without pushing up input prices.
3. The source names agricultural markets directly as a good example of this constant cost pattern.
4. An increasing cost industry would instead see wages or input prices rise as it expands, which is not the pattern described for agriculture here.
_Source: OpenStax Principles of Microeconomics for AP Courses (CC BY 4.0), Ch 8 "Perfect Competition", section 8.3 | Entry and Exit Decisions in the Long Run_
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