Question

The long period supply curve will slope ________________.

• A. downwards to the right
• B. upwards to the right
• C. upwards to the right, though less steeply than the short-period supply curve of the industry
• D. parallel to x - axis

Answer 1

Answer: (C)

upwards to the right, though less steeply than the short-period supply curve of the industry

The quantity supplied and the price in the market will always have a positive correlation, as suppliers will be willing to supply higher output levels at higher prices and this will translate into higher revenue. Thus the supply curve slopes upwards to the right. In the long run the supply curve will tend to be more elastic than in the short run as the supplier is allowed to appropriately adjust the supply in the long run, since all factors are variable.