Practice Questions
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Which of the following best describes an increasing cost industry?
In an increasing cost industry, when more products are made, the costs to produce them go up. Other options are incorrect because Some might think tha...
In increasing cost industries, how does an increase in output typically affect production costs?
In increasing cost industries, making more products usually costs more. Other options are incorrect because Some might think that making more products...
In an increasing cost industry, what happens to production costs as the output increases due to diminishing returns?
In an increasing cost industry, as you make more products, the cost to produce each one goes up. Other options are incorrect because Some might think ...
How do increasing cost industries typically maintain a competitive advantage despite facing rising costs, particularly in relation to externalities?
Industries can lower their costs by producing more items. Other options are incorrect because Some might think cutting quality saves money; Raising pr...
In the context of increasing cost industries, how do production costs influence price elasticity and cost management strategies in a firm?
When production costs go up, people are less sensitive to price changes. Other options are incorrect because This suggests that higher costs make dema...
What characterizes an increasing cost industry?
In an increasing cost industry, as a company makes more products, the cost to make each product goes up. Other options are incorrect because Some migh...
In increasing cost industries, what typically happens to production costs as output increases?
In increasing cost industries, as you make more products, the cost to produce each one goes up. Other options are incorrect because Some might think t...
Which of the following best describes increasing cost industries in the context of economies of scale?
Increasing cost industries are those where costs go up as you make more products. Other options are incorrect because This option suggests that costs ...
Arrange the following steps that describe the effects of new firms entering an increasing cost industry on market dynamics: A. New firms enter the industry due to potential profits. B. The demand for labor increases, leading to higher wages. C. Average production costs rise for all firms. D. Some firms may exit the market due to higher costs.
New firms see a chance to make money, so they join the industry. Other options are incorrect because This option suggests that costs rise before wages...
A new technology company enters an already saturated smartphone market, which leads to an increase in the demand for skilled software developers. As more firms compete for these developers, the average wages for this skill set rise significantly. How does this scenario illustrate the concept of increasing cost industries?
When new companies enter the market, they need skilled workers. Other options are incorrect because Some might think that new companies don't change c...
In the context of increasing cost industries, which of the following statements are true? Select all that apply.
Other options are incorrect because Some might think that more firms mean lower costs for everyone; It might seem that new firms would just share reso...
If the entry of new firms into an increasing cost industry leads to higher average production costs for all existing firms, what is the most likely underlying cause of this phenomenon?
When new companies join an industry, they compete for the same resources. Other options are incorrect because This answer suggests that new firms help...
A new technology firm enters a market that is experiencing increasing costs. What is the most likely outcome for existing firms in this industry?
When new firms enter a market, they use resources that are already limited. Other options are incorrect because Some might think competition lowers co...
What effect do new entrants have on the average production costs in increasing cost industries?
New companies entering an industry can raise costs for everyone. Other options are incorrect because Some might think new firms help lower costs for e...
In increasing cost industries, the entry of new firms leads to higher average production costs due to the scarcity of resources, which in turn causes the _____ to shift left as firms exit the market.
When new firms enter, they use up resources. Other options are incorrect because Some might think demand changes when firms leave; The price level ref...
In an increasing cost industry, what effect does the entry of new firms have on the overall market equilibrium?
When new firms enter an increasing cost industry, they compete for resources. Other options are incorrect because Some might think that more firms mea...
Increasing cost industries are to market dynamics as scarcity of resources is to ?
When resources are scarce, it costs more to produce goods. Other options are incorrect because Some might think that fewer resources mean less demand;...
Master Increasing Cost Industries
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