A constant-cost industry occurs when the addition of more firms into an industry does not affect the long run average cost of the firms in the industry. This happens when the expansion of an industry causes no change in production costs or resource prices. The reason this happens is that once the demand for a certain product increases, economic profits of the firms in the industry increase as well. This, in turn, causes more firms to enter the industry. This increase in suppliers then increases supply. Since Supply and Demand have both now increased, the market price has remained the same.
Examples of where constant-cost industry can happen is in retail or a zuchinni market, where new firms can employ workers for the same price as existing firms.



A Zuchini Market is a great example of a Constant cost industry, however this zuchini might sell for a bit more haha lol!!!omg!!! :)




a representation of how a constant-cost industry occurs
a representation of how a constant-cost industry occurs

Links
Good Summary
Definition
Relation to Equilibrium


Sample Problem
In a shoe sales industry, one large company goes out of buisness and in turn the prices rise. Is this a constant cost industry?

Sample Anwser
No it is not a constant cost industry. Because the cost went up after the company left the industry the costs were no longer constant. Thus this industry is not a constant cost industry.