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
what is microeconomics

EMPLOYMENT AND UNEMPLOYMENT POLICY: Engagement of a person in any economic activity is central to the concept of identifying a worker. A worker is one who participates in any

Around 2007, the world copper price was $2.00 per pound and 12 million metric tons per year was the quantity transacted. A) Assume copper’s demand elasticity is -.5 and supply elas

(i). A firm's costs are 500 when output is 100. If the TC function is linear and fixed cost (FC) are 200, find the marginal cost when Q = 4, 5 and 6. (ii). The following are est

ENUMERATION OF WORKERS: Now, let us discuss about the sources of data in India on workers. In India, two main organisations which generate and compile data on workers are the

CHARACTERISTICS OF ECONOMIC INFRASTRUCTURE: Natural monopoly is the situation where the provision of a good or a service has economies of scale, which are realised most when a

How are the limitations of the economics theory affected? Limitation of Economic Theory: While examining the generality of an economic theory, one must realize any assump

The income elasticity of demand calculates the responsiveness of the quantity demanded of a commodity to changes in consumers' incomes.  This is typically calculated by replacing t

ADMINISTRATIVE REFORMS - ECONOMIC POLICY: During the last few decades, phenomenal changes are taking place at a fast rate in the field of science and technology as well as in

1. Explain how absolute advantage and comparative advantage differ? 2. Give an example in which a person has an absolute advantage in doing some thing but another pers