Question

Marshall suggested that the cause of a downward-sloping long-run supply curve is a. The absence of fixed cost in the long run. B. The increased number of firms in the industry. C. Reduced input prices. D. Reduced output prices.

Answer 1

Marshall suggested that the cause of a downward-sloping long-run supply curve is a) The absence of fixed cost in the long run.

A fixed cost tends to increase the marginal cost curve in the short run but due to the fact that the fixed cost is not viable in the long run, the marginal cost declines and so the long-run supply curve is falling in the long run.

In a lowering value industry, the long-run deliver curve is downward sloping due to the fact that as output will increase and new corporations input, production costs decline. The computer enterprise is an instance of a downward sloping supply curve, considering the fact that as the range of computers produced multiplied, the charge of inputs, consisting of chips, decline.

The lengthy-run deliver curve for an industry in which production fees boom as output rises (a growing-value industry) is upward sloping. The long-run deliver curve for an enterprise wherein manufacturing costs lower as output rises (a reducing-price enterprise) is downward sloping.

The long-run delivery is the delivery of goods to be had whilst all inputs are variable. The lengthy-run supply curve is always extra elastic than the short-run delivery curve. The lengthy-run average value curve envelopes the fast-run average fee curves in a u-shaped curve.

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