Question

In India, the Milk Market resembles a perfectly competitive industry. If the industry is an increasing cost industry, the long run supply curve of the industry _________.

• A. Slopes upward to the right.
• B. Slopes downward to the right.
• C. Would be a vertical straight line.
• D. Would be horizontal straight line.

Answer 1

The correct option is A Slopes upward to the right.

If the milk market in India is an increasing cost industry then the long run supply curve of the firm will be upward sloping to the right signifying that as the price of the product increases it supply also increases irrespective of the cost of production.