Competitive short run supply curve of firm and industry, Microeconomics

A Competitive Short Run Supply Curve of Firm

795_short run supply curve.png

* Observations:

- P = MR

- MR = MC

- P = MC

* Supply is amount of output for every possible price.  Thus:

-  If P = P1, then q = q1

- If P = P2, then q = q2

2191_short run supply curve1.png

* Observations:

- Supply is upward sloping because of diminishing returns.

- Higher price compensates firm for the higher cost of additional output and increases total profit as it applies to all the units.

*  Firm's Response to an Input Price Change

- When price of firm's product changes, firm changes its output level, such that the marginal cost(MC) of production remains equal to price.
2491_short run supply curve2.png

The Short Run Production of the Petroleum Products

1669_short run supply curve3.png

* Stepped SMC illustrates a different production (cost) process at several capacity levels. 

* Observation:

- With stepped marginal cost (MC) function, small changes in price may not trigger change in output

* The short run market supply curve shows amount of output which the industry will produce in the short run for every possible price.

* Consider, a competitive market having three firms:

 Industry Supply in Short Run

1743_short run supply curve4.png

Posted Date: 10/12/2012 5:29:57 AM | Location : United States







Related Discussions:- Competitive short run supply curve of firm and industry, Assignment Help, Ask Question on Competitive short run supply curve of firm and industry, Get Answer, Expert's Help, Competitive short run supply curve of firm and industry Discussions

Write discussion on Competitive short run supply curve of firm and industry
Your posts are moderated
Related Questions
How to calculate new profit earn by a firm in oligopoly if another firm cheat

Change in consumer and  producer surplus from price controls * Observations: - The loss is equal to area B + C. - The change in surplus = (A - B) + (-A - C) = -B - C -

1. Consider a world with two assets: a riskless asset paying a zero interest rate, and a risky asset whose return r can take values +10% or –8% with equal probability. An individua


how advertisement affects the sales revenue of a firm ?


under which market structure does the banking sector fall?


1.      How can a nation and its producers determine whether or not it has a comparative advantage in producing a particular good or service? a 2.  The above figure show

In June 2009, Textile co. (a domestically located firm) purchased 1000 yards of cloth from India (a foreign country) for $1000. Textile co. hired Elizabeth and paid her $5000 to s