Q:

What is a constant-cost industry?

A:

According to Business Dictionary, a constant-cost industry is an industry in which the ratio of units produced to the production cost per unit is constant, even when demand increases. This industry also keeps input prices the same.

According to AmosWEB, in a perfectly competitive industry, the demand and supply curves offset each other. An initial increase in demand causes equilibrium price and quantity to rise, but with free entry and exit, new firms enter the industry as they are induced by higher retail prices. This increase of firms leads to an increase in supply with a lower equilibrium price but a higher quantity. Yet, the supply curve shifts to the original price level of the old equilibrium price, thereby maintaining the same cost in the long run but having higher output.


Is this answer helpful?

Similar Questions

  • Q:

    What are the characteristics of perfect competition?

    A:

    Perfect competition is characterized by factors like multiple sellers (or competitors), identical products on the market, sellers accepting rather than influencing market prices and free entry and exit into the given industry. In the actual business world, perfect competition is extremely rare, but it is an important economic concept.

    Full Answer >
    Filed Under:
  • Q:

    Why does the supply curve slope upward?

    A:

    The supply curve slopes upward because the volume suppliers in an industry are willing to produce increases as the price the market pays increases. Under typical circumstances, the revenue and profit derived by a supplier increases as the market price rises.

    Full Answer >
    Filed Under:
  • Q:

    What did things cost in 1963?

    A:

    In the United States in 1963, the average cost of a new home was $19,300. A gallon of milk cost $0.49, and a gallon of gasoline was only $0.30. The tuition to attend one year of classes at the University of Texas as a resident was only $100.00.

    Full Answer >
    Filed Under:
  • Q:

    What did things cost in 1929?

    A:

    In 1929, a loaf of bread cost 10 cents, insurance was $7 per month, eggs were 45 cents per dozen, two blocks of salt cost $1.80, and two new tubs cost $1.25. These prices varied, depending on the state.

    Full Answer >
    Filed Under:

Explore