Question
An industry has 200 firms, each with the production function f ( x 1, x 2) = x 1 1/2 x 2 1/2 . The
An industry has 200 firms, each with the production functionf(x1,x2) =x11/2x21/2. The price of factor 1 is $1 and the price of factor 2 is $1. In the long run, both factors are variable, but in the short run, each firm is stuck with using 10 units of factor 2. The long- run industry supply curve is
a. upward sloping with zero supply if price is less than $10.
b. horizontal with zero supply for prices less than $2 and infinite supply for prices greater than $2.
c. horizontal with zero supply for prices less than $5 and infinite supply for prices greater than $5.
d. downward sloping for outputs less than 10.
e. None of the above
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