Question

If input prices for a perfectly competitive industry remain constant as the output of the industry expands in the long run, the industry supply curve will:
a. be perfectly horizontal.
b. have a positive slope.
c. be perfectly vertical.
d. have a negative slope.

Answer 1

Answer:

a. be perfectly horizontal.

Explanation:

The supply curve graph the prices that suppliers will demand to produce different levels of output. It is normally upward-sloping because of scarcity of inputs that will push up costs and thus drive up cost.

If input prices does not change, the industry will be willing to supply any quantity (in the long run) at the same price (because if they charge higher than their constant costs they will lose to competition) => the supply curve will be a horizontal line (perfectly horizontal)