Consider a typical firm in a perfectly competitive market. Assume that the firm experiences diminishing marginal returns and that the industry experiences external
economies. Which of the following statements is true?
a. In the short run and the long run the industry supply curve is perfectly elastic.
b. In the short run the industry supply curve slopes upwards, but in the long run the
industry supply curve is downward sloping.
c. In the short run the industry supply curve slopes upwards, but in the long run the
industry supply curve is perfectly elastic.
d. In the short run the industry supply is perfectly elastic, but in the long run the industry
supply curve is upward sloping.
e. The short industry and the long run industry supply curves slope upwards.