Chapter 8.8: The Industry's Long-Run Supply Curve

Constant-Cost Industry

industry whose long-run supply curve is horizontal line at a price that is equal to. the long-run minimum average cost of production

Increasing-Cost Industry

industry whose long-run supply curve is upward sloping

Decreasing-cost industry

industry whose long-run supply curve is downward sloping

reduce its output

Tax on output encourages the firm to __

MC + t = P

If the firm can still earn a positive or zero economic profit after the imposition of the tax, it will maximize its profit by choosing an output level at which __.

exit

If the firm can no longer earn an economic profit after the tax has been imposed, it will choose to __ the market.

large

In a constant-cost industry, the long-run supply curve is horizontal, and the long-run supply elasticity is infinitely __

positive but finite

In an increasing-cost industry, however, the long-run supply elasticity will be __