Question

Under the law of diminishing returns (increasing cost), how does the long-run supply curve generally slope?

Options

• Downward from left to right

• Vertical to the X-axis

• Upward from left to right

• Horizontal to the X-axis

Answer 1

Upward from left to right

Explanation: 

With diseconomies of scale, costs rise as output increases, so a higher quantity can be supplied only at a higher normal price, giving an upward-sloping supply curve.