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Elasticity of Market Supply
• Perfectly inelastic short run supply arises when industry's plant and equipment are so fully utilized that new plants should be built to achieve greater output.
The World Copper Industry (in the year 1999)
The Short Run World Supply of Copper
Producer Surplus in the Short Run
- Firms earn surplus on all but last unit of output.
- The producer surplus is sum over all the units produced of difference between market price of the good and marginal cost (MC) of production.
* Producer Surplus in Short Run
* Observation
- Short run with the positive fixed cost
Producer Surplus for the Market
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