A constant-cost industry is an industry in which A) average costs fall as the industry expands output. B) average costs rise as the industry expands output. C) average costs remain constant as the industry expands output. D) input prices rise at a constant rate as firms in the industry use more inputs.

Question

Rosa Galvan

Business

17 October, 08:27

A constant-cost industry is an industry in which A) average costs fall as the industry expands output. B) average costs rise as the industry expands output. C) average costs remain constant as the industry expands output. D) input prices rise at a constant rate as firms in the industry use more inputs.

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Kenna Odonnell · Answer 1

Answer: C) average costs remain constant as the industry expands output.

Explanation: An industry in which its average costs (the ratio comparing units produced to production cost per unit) remain constant as the industry expands output is known as a constant-cost industry. The situation arises when despite industry demand or industry volume, the general cost of inputs used in the production of goods or services do not increase.