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Purely competitive firms in increasing cost industries

When purely competitive firms operate within increasing cost industries, several: (1) individual firms’ supply curves should be horizontal. (2) firms should experience decreasing returns to scale at low output levels. (3) specialized resources probably have upward-sloping supply curves. (4) firms are probable to become natural monopolies. (5) potential economies of scale are not being exploited. (6) long run fixed costs increase while market demand grows.

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