Principles of Microeconomics / Unit 17 MIC 1625 short lesson, about 20 seconds
Long-Run Industry Supply
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The idea
Entry can leave input prices unchanged, a constant-cost industry with flat long-run supply; raise them, increasing cost, upward sloping; or lower them, decreasing cost, downward sloping. The slope is what expansion does to input prices.
In practice
A boom that bids up a scarce input is increasing cost.
Where people slip
The firm's average cost is a U in every case; only the industry's supply differs.
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