The Industry's Long-Run Supply Curve

* Long-Run Elasticity of Supply

  1) Constant-cost industry

• Long run supply is horizontal
• Small increase in price will induce extremely large output increase
• Long run supply elasticity is considerably large
• Inputs would be available readily

  2) Increasing cost industry

• Long run supply is sloping upward and elasticity is positive
• The slope will depend on rate of increase in input cost
• Long run elasticity will usually be greater than short run elasticity of supply