A characteristic of an increasing cost industry is that, as the market expands, the:
a. price of the product increases.
b. costs of production increase.
c. price of the product decreases.
d. costs of production decrease.
b. costs of production increase.
For an increasing cost industry, as the market expands, the old and new firms experience increases in their costs of production. Here companies may have to deal with limited inputs, such as skilled labor. As the demand for these workers rises, wages rise, and this increases the cost of production for all firms.
You might also like to view...
In the wireless communication industry, firms that provide broadband access to the Internet are best regarded as
A) platforms in a shared-input market. B) end users in a shared-input market. C) platforms in a matchmaking market. D) end users in a matchmaking market.
Why don't wages fall so that everyone with the skills and desire gets a job?
A. The government might prevent it, through minimum-wage legislation. B. Labor unions might prevent it, through bargaining backed by the threat to strike. C. Firms themselves might prevent it, by voluntarily choosing to pay higher wages than necessary. D. All of these are reasons why wages may not fall to equilibrium.
Which of the following statements is true? a. Over time, when demand for health care continues to rise relatively more than supply, the cost of health care falls. b. Over time, when demand for health care continues to rise relatively more than supply , the cost of health care continues to rise. c. An increase in the demand for health care is accompanied by an outward shift in the supply curve
d. The price of health care rises either with a fall in demand or an increase in supply. e. The change in the demand for health care with no change in supply causes the price to fall continuously.
The natural rate of unemployment in the United States
a. has consistently equaled 6 percent b. has increased as the federal budget deficit has fallen c. is similar to the natural rate in European countries d. has increased in recent years e. is now unusually high because so many women have entered the labor force