【正文】 of production plus the average economic rent is equal to the ticket price. When the opportunity cost associated with owning the franchise is taken into account, the team earns zero economic profit. Figure Producer Surplus in the Long Run Chapter 8: Profit Maximization and Competitive Supply 32 of 37 THE INDUSTRY’S LONGRUN SUPPLY CURVE ConstantCost Industry ● constantcost industry Industry whose longrun supply curve is horizontal. LongRun Supply in a ConstantCost Industry In (b), the longrun supply curve in a constantcost industry is a horizontal line SL. When demand increases, initially causing a price rise (represented by a move from point A to point C), the firm initially increases its output from q1 to q2, as shown in (a). But the entry of new firms causes a shift to the right in industry supply. Because input prices are unaffected by the increased output of the industry, entry occurs until the original price is obtained (at point B in (b)). Figure The longrun supply curve for a constantcost industry is, therefore, a horizontal line at a price that is equal to the longrun minimum average cost of production. Chapter 8: Profit Maximization and Competitive Supply 33 of 37 THE INDUSTRY’S LONGRUN SUPPLY CURVE IncreasingCost Industry ● increasingcost industry Industry whose longrun supply curve is upward sloping. LongRun Supply in an IncreasingCost Industry In (b), the longrun supply curve in an increasingcost industry is an upwardsloping curve SL. When demand increases, initially causing a price rise, the firms increase their output from q1 to q2 in (a). In that case, the entry of new firms causes a shift to the right in supply from S1 to S2. Because input prices increase as a result, the new longrun equilibrium occurs at a higher price than the initial equilibrium. Figure In an increasingcost industry, the longrun industry supply curve is upward sloping. Chapter 8: Profit Maximization and Competitive Supply 34 of 37 THE INDUSTRY’S LONGRUN SUPPLY CURVE DecreasingCost Industry ● decreasingcost industry Industry whose longrun supply curve is downward sloping. You have been introduced to industries that have constant, increasing, and decreasing longrun costs. We saw that the supply of coffee is extremely elastic in the long run. The reason is that land for growing coffee is widely available and the costs of planting and caring for trees remains constant as the volume grows. Thus, coffee is a constantcost industry. The oil industry is an increasing cost industry because there is a limited availability of easily accessible, largevolume oil fields. Finally, a decreasingcost industry. In the automobile industry, certain cost advantages arise because inputs can be acquired more cheaply as the volume of production increases. Chapter 8: Profit Maximization and Competitive Supply 35 of 37 THE INDUSTRY’S LONGRUN SUPPLY CURVE The Effects of a Tax Effect of an Output Tax on a Competitive Firm’s Output An output tax raises the firm’s marginal cost curve by the amount of the tax. The firm will reduce its output to the point at which the marginal cost plus the tax is equal to the price of the product. Figure Chapter 8: Profit Maximization and Competitive Supply 36 of 37 THE INDUSTRY’S LONGRUN SUPPLY CURVE The Effects of a Tax Effect of an Output Tax on Industry Output An output tax placed on all firms in a petitive market shifts the supply curve for the industry upward by the amount of the tax. This shift raises the market price of the product and lowers the total output of the industry. Figure Chapter 8: Profit Maximization and Competitive Supply 37 of 37 THE INDUSTRY’S LONGRUN SUPPLY CURVE LongRun Elasticity of Supply Owneroccupied and rental housing provide interesting examples of the range of possible supply elasticities. If the price of housing services were to rise in one area of the country, the quantity of services could increase substantially. Even when elasticity of supply is measured within urban areas, where land costs rise as the demand for housing services increases, the longrun elasticity of supply is still likely to be large because land costs make up only about onequarter of total housing costs. The market for rental housing is different, however. The construction of rental housing is often restricted by local zoning laws.