Increasing-Cost+Industry

//Increasing cost industries// result from an increase in firms in that industry. When there are less firms in an industry, the costs for production are relatively low, but as there are more firms added, the demand for resources goes up, so as a result so do costs for those resources, which creates an //increasing-cost industry//. In short, an //increasing cost industry// results from an increase in producers which results in an increase in supply which causes a greater demant for the resources, which causes prices for resources to go up, which is why the costs for the industry as a whole are increasing.
 * Description: **

An example of an //increasing cost industry// could be an industry experiencing economic profits in the short run. Because the industry has economic profits, more firms will enter the industry. For the firm(s), however, that were there first will experience an increasing cost to their industry as a result of the influx of producers. Now since demand has increased for the resources used to produce their products, the price of resources will go up because the firms that produce the resources will want to maximize their profits as well. This increase in costs of production will result in higher variable costs for each firm. In the future, the industry will experience a decrease in supply as now the number of firms is too great, and some cannot profit in the //increasing costs industry//. media type="youtube" key="IVoF8-0zVmo" height="344" width="425" This video can represent an increasing cost industry, farms are a great example of this. As the industry size increases, costs for supplies like plows, tractors, etc. increases dramatically because the firms that are producing those products are trying to maximize their own profits as well.
 * Video:**

**Picture:**  ** External Links: ** [|Simple Definition] [|In-depth Definition] [|Examples and Graphs] The long run supply curve of an increasing-cost industry is A. Vertical Line B. Horizontal Line C. Upward Sloping D. Downward Sloping
 * Question:**

[|Answer]