Chapter 60, Problem 3MCQ

To determine

The long-run industry supply curve in comparison to the short-run industry supply curve.

Answer to Problem 3MCQ

(a) Elastic.

Explanation of Solution

The long run industry supply curve will be elastic as compared to short run industry supply curve because, in the long run, the firm incurs a constant cost which means the firm can produce as much output as a constant cost which is called constant cost industry which give rise to perfectly elastic supply curve but in the short run, the industry supply curve is upward sloping due to increasing cost industry. Hence, option (a) is correct and options (b), (c), (d), and (e) are incorrect.

Economics Concept Introduction

Introduction:

The supply curve shows the direct or positive relationship between the price and quantity supplied of goods. The supply curve is upward-sloping. The industry supply curve is the sum of an individual firm’s supply curve and it shows how the quantity supplied by an industry reacts to the price provided that firms have had time to enter or exit the industry.