Solved: 1 The long run supply curve shows the relationship

between

1. The long-run supply curve shows the relationship between ________on the horizontal axis
and ________on the vertical axis.
2. Arrows up or down: As the total output of an increasing- cost industry increases, the average
cost of production ________because input prices________ and the productivity of inputs used
by firm’s ________.
3. As the total output of an increasing-cost industry increases, the average cost of production
________ (increases/decreases), so the supply curve is ________ (horizontal/positively sloped/
negatively sloped).
4. In table, suppose the relationship between industry output and the total cost for the typical
firm is linear, and each firm produces six shirts. If there are 400 firms in the industry, the total
cost for the typical firm is $ ________, and the average cost per shirt is $ ________. Another
point on the supply curve is a price of $________ and a quantity of________ shirts.

5. An increase in the price of shirts will cause firms to ________the industry and as output
increases ________the cost of production increases. Entry will continue until
________equals________.
6. Land-use zoning that limits the amount of land for apartments generates a relatively
________ (flat/steep) supply curve for housing, so an increase in the demand for apartments
leads to a relatively ________ (large/small) increase in price.
7. During World War II, the quantity of wolfram supplied increased because the Allies buying
program increased the ________of wolfram.

ANSWER
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