Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
An industry where production costs decrease as output increases
B
An industry where production costs remain constant as output increases
C
An industry where production costs increase as output increases
D
An industry where production costs are unrelated to output
Understanding the Answer
Let's break down why this is correct
Answer
An increasing cost industry is one where the cost of producing goods rises as more units are produced. This usually happens because resources become scarce or more expensive as production expands. For example, if a factory wants to make more toys, it might need to hire more workers or buy more materials, which could cost more than before. As a result, the price of the toys may go up to cover these higher costs. In simple terms, the more you produce, the more it costs to keep producing, which can affect the prices for consumers.
Detailed Explanation
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 that costs go down when making more products; It's a common belief that costs stay the same when producing more.
Key Concepts
industry structure
Topic
Increasing Cost Industries
Difficulty
easy level question
Cognitive Level
understand
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