{"id":208689,"date":"2025-04-28T04:46:25","date_gmt":"2025-04-28T04:46:25","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=208689"},"modified":"2025-04-28T04:46:27","modified_gmt":"2025-04-28T04:46:27","slug":"long-run-market-supply-curves-are-downward-sloping-if","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/04\/28\/long-run-market-supply-curves-are-downward-sloping-if\/","title":{"rendered":"Long-run market supply curves are downward sloping if"},"content":{"rendered":"\n

Long-run market supply curves are downward sloping if
A firms are identical.
B the number of firms is restricted in the long run.
C input prices fall as the industry expands.
D All of the above.<\/p>\n\n\n\n

The correct answer and explanation is :<\/strong><\/mark><\/p>\n\n\n\n

The correct answer is: C) input prices fall as the industry expands<\/strong>.<\/p>\n\n\n\n

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Explanation:<\/strong><\/p>\n\n\n\n

In general, long-run market supply curves tend to be upward sloping<\/strong> or horizontal<\/strong>. However, under specific conditions, they can actually slope downward<\/strong>, meaning that as more of a good is produced, the market price falls. This unusual situation occurs primarily when input prices decrease as the industry grows<\/strong>.<\/p>\n\n\n\n

Here\u2019s why: in the long run, firms can enter or exit the market freely. If the cost of production falls as the industry expands \u2014 for example, due to economies of scale<\/strong>, bulk discounts<\/strong>, or improvements in technology or infrastructure<\/strong> \u2014 firms are willing to supply more at lower prices. These falling input costs shift the firms’ individual cost curves downward, allowing them to produce at a lower minimum average cost. As a result, the industry can supply more output even at a lower price, creating a downward-sloping long-run supply curve<\/strong>.<\/p>\n\n\n\n

Now let’s consider the other options:<\/p>\n\n\n\n