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According to the source, how does the long-run supply curve differ across the three industry types?
APerfectly flat for every one of the three cost types
BUpward for constant cost, flat for increasing, downward for decreasing
CDownward sloping across each of the three cost types
DFlat for constant, upward for increasing, downward for decreasing cost
Answer & Solution
Correct answer: D. Flat for constant, upward for increasing, downward for decreasing cost
1. The long-run supply curve traces out how the industry's price and quantity relate once it has fully adjusted at each demand level.
2. In a constant cost industry, expanding output does not change price, giving a flat, horizontal long-run supply curve.
3. In an increasing cost industry, expanding output raises price, giving an upward-sloping long-run supply curve.
4. In a decreasing cost industry, expanding output lowers price, giving a downward-sloping long-run supply curve, the opposite of the increasing cost case.
_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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