Is the long-run supply curve for films likely to be horizontal or upward sloping?
Explain. The long-run supply curve depends on the cost structure of the industry. If there is a fixed supply of actors and actresses, as more films are produced, higher salaries must be offered. Therefore, the industry experiences increasing costs. In an increasing-cost industry, the long-run supply curve is upward sloping. Thus, the supply curve for videos would be upward sloping. 9. True or false: A firm should always produce at an output at which long-run average cost is minimized. Explain. False. In the long run, under perfect competition, firms should produce where average costs are minimized. The long-run average cost curve is formed by determining the minimum cost at every level of output. In the short run, however, the firm might not be producing the optimal long-run output. Thus, if there are any fixed factors of production, the firm does not always produce where long-run average cost is minimized. 10. Can there be constant returns to scale in an industry with an upward-slopin
