- 14 An Increasing Cost Industry Is An Industry Where A Each Firm S Long Run Average Cost Curve Is Upward Sloping B A 1 (78.87 KiB) Viewed 53 times
14. An increasing cost industry is an industry where: a) Each firm's long-run average cost curve is upward sloping. b) A firm's output more than doubles when its inputs double. c) Input prices are driven up as the industry expands. d) The long-run market supply curve is horizontal. e) None of the above. 15. The following diagram depicts the cigarette market, which is currently at a competitive, unregulated equilibrium; the market price is p*= $5/pack and Q*=100 packs are bought and sold: $/pack P=51 D Q*=100 Cigarettes (packs) If a per-unit tax of $1/unit (to be collected by sellers) is imposed on this market, how do we expect the outcome to be affected? a) Consumers will pay $6 for each pack of cigarettes, b) The government will collect (100 packs)x($1/pack)=$100 in tax revenue c) Consumer surplus will decrease. d) Producer surplus will increase. e) All of the above.