costs of production, which makes the new zero-profit level intersect at a higher price than before. Here

companies may have to deal with limited inputs, such as skilled labor. As the demand for these workers rises,

wages rise and this increases the cost of production for all firms. The industry supply curve in this type of

industry is more inelastic.

For a decreasing cost industry, as the market expands, the old and new firms experience lower costs of

production, which makes the new zero-profit level intersect at a lower price than before. In this case, the

industry and all the firms in it are experiencing falling average total costs. This can be due to an improvement

in technology in the entire industry or an increase in the education of employees. High-tech industries may be

a good example of a decreasing cost market.

Figure 8.8 (a) presents the case of an adjustment process in a constant-cost industry. Whenever there are
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