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Homework answers / question archive / When some resources used in production are only available in limited quantities, it is likely that the long-run supply curve in a competitive market is: a
When some resources used in production are only available in limited quantities, it is likely that the long-run supply curve in a competitive market is:
a. Downward sloping,
b. Upward sloping,
c. Horizontal,
d. Vertical.
The correct option is b. Upward sloping.
Explanation:
Given that, the resources are present or available in limited quantity to produce a product, and a firm is running in a competitive market, the only incentive to increase the supply of such products is when the price level increases in the market. Therefore, increased price level results in increases quantity supplied, and that, in turn, explains the upward sloping long-run supply curve.
