Why is the long-run market supply curve upward-sloping in an increasing-cost ind

Question

Why is the long-run market supply curve upward-sloping in an increasing-cost industry?

A) As output rises, demand increases. Higher demand increases the price that firms can charge for their product. B) As output rises, average total costs shift down. Lower marginal costs decrease the price at which firms make zero profit in the short run but increase the long-run equilibrium price. C) As output rises, some firms gain more influence in the market because smaller firms cannot absorb the increases in costs, allowing remaining firms to raise price. D) As output rises, average total costs shift up. Higher marginal costs increase the price at which firms make zero profit and increase the long-run equilibrium price.

Explanation / Answer

D. As output rises, average total costs shift up. Higher marginal costs increase the price at which firms make zero profit and increase the long-run equilibrium price

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