Economics 11th Edition by William McEachern

Exercise 15

THE LONG-RUN INDUSTRY SUPPLY CURVE The following graph shows possible long-run market supply curves for a perfectly competitive industry. Determine which supply curve indicates a constant-cost industry and which an increasing-cost industry.
a. Explain the difference between a constant-cost industry and an increasing-cost industry.
b. Distinguish between the long-run impact of an increase of market demand in a constant-cost industry and the impact in an increasing-cost industry.