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The industry supply curve is upward-sloping because: a
The industry supply curve is upward-sloping because:
a. as price rises, even though existing firms produce the same amount, new firms decide to enter the industry.
b. as price rises, no new firms enter an industry and existing firms continue to produce the same amount.
c. as price rises, even though no new firms enter an industry, existing firms produce more.
d. as price rises, existing firms produce more and new firms decide to enter the industry.
Expert Solution
The answer is d. as price rises, existing firms produce more, and new firms decide to enter the industry.
The law of supply states that as the price of a good increases the supply will increase. The supplying firms will be willing to produce more if they will receive more of a price for their product. Additionally, in a market where prices are higher, new firms will have an incentive to join the market as a supplier.
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