19. The long run supply curve for a perfectly competitive industry may be horizontal, upward sloping or downward sloping depending on certain factors. Suppose the CD-ROM Reader manufacturing industry is perfectly competitive. Under which of the following conditions will the CD-ROM Reader industry have a downward sloping long run supply curve? (A CD-ROM (Compact Disc Read Only Memory) reader is a computer peripheral (accessory) which allows the computer to read data from a CD-ROM disk similar to those which are used for music. These days most software is distributed on CD-ROMs. Most CD-ROM readers can play music CDs as well. By the way, they were available for the Macintosh well before they were for Windows machines.)

1. As more CD-ROM Reader manufacturing firms enter the industry, those firms which supply motors to the CD-ROM Reader manufacturing firms find demand for their product rising and their per unit production costs rising. Motors for CD-ROMs are clearly a variable input, the more CD-ROM readers manufactured, the more motors one needs to buy. If the cost of motors is rising as the size of the CD-ROM Reader manufacturing industry grows the long run supply curve will be upward sloping.
2. As more CD-ROM Reader manufacturing firms enter the industry, those firms which supply motors to the CD-ROM Reader manufacturing firms find demand for their product rising and their per unit production costs falling.
3. As more CD-ROM Reader manufacturing firms enter the industry, more firms enter the computer printer industry as well. While this statement may in general be true (though it may not be) it has nothing, in any obvious way, to do with the production costs of CD-ROM Readers.
4. As more CD-ROM Reader manufacturing firms exit the industry, those firms which supply motors to the CD-ROM Reader manufacturing firms find their per unit production costs falling. This describes an upward sloping long run supply curve, with the same reasoning used in part (a) and therefore, is also incorrect.
5. As more CD-ROM Reader manufacturing firms enter the industry, those firms which supply motors to the CD-ROM Reader manufacturing firms find their per unit production costs remain unchanged. Unless there is another effect with some other supplier, this would imply a horizontal long run supply.