Principles of Microeconomics / Unit 7 MIC 0631 short lesson, about 20 seconds
Increasing- and Decreasing-Cost Industries
Captions available
The idea
In an increasing-cost industry, expansion bids up input prices, so long-run supply slopes up. In a decreasing-cost industry, expansion lowers input prices, and long-run supply slopes down.
In practice
House building bids up carpenters' wages; a growing computer industry cheapened its chips.
Where people slip
Every point on any long-run supply curve is a zero-profit point. What differs is the price at which zero profit occurs.
Your place on the trail
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