Individual firm and market supply curves, Managerial Economics

Individual firm and market supply curves

The quantities and prices in the supply schedule can be plotted on a graph. Such a graph is called the firm supply curve.

A firm supply curve is a graph relating the price and the quantities of a commodity a firm is prepared to supply at those prices.

The typical supply curve slopes upwards from left to right. This illustrates the second law of supply and demand "which states that the higher the price the greater the quantity that will be supplied".

More is supplied by the firms which could not make a profit at the lower price.

673_market curve.png

Fig : The firm supply curve

The market supply curve is obtained by horizontal summation of the individual firm supply curves i.e. taking the sum of the quantities supplied by the different firms at each price.

Consider, for the sake of exposition, an industry consisting of two firms. At price P1, firm I (diagram below) supplies quantity q1, firm II supplies quantity q2, and the total market supply is q1+q2

At price P2, firm I supplies q'1, firm II supplies quantity q'2, and the total market supply is q'1+q'2,. SS is the total market supply curve.

613_market curve1.png

Posted Date: 11/27/2012 5:47:48 AM | Location : United States







Related Discussions:- Individual firm and market supply curves, Assignment Help, Ask Question on Individual firm and market supply curves, Get Answer, Expert's Help, Individual firm and market supply curves Discussions

Write discussion on Individual firm and market supply curves
Your posts are moderated
Related Questions
Suppose the consumer can choose either coffee shop 1 or coffee shop 2, but not both. - Assuming that other things (such as location, quality of coffee, and so on) are the same,

Cross Elasticity Cross elasticity of demand measures the degree of responsiveness of the quantity demanded of one good (B) to changes in the price of another good (A).  It is

The individual and market demand curves The quantities and prices in the demand schedule can be plotted on a graph. Such a graph after the individual demand schedule is called

Disposable Income This is the income which households actually have available to spend or to save.  To calculate disposal income, which is indicated by Ya, the statistician mu

Imagine of these concepts (markets, elasticity, production, costs, market structures).  Take one or two of those concepts and use it to examine and understand economic situations o

How does economic theory contribute to managerial decisions?

Part A : Select one of the following economic issues and discuss how it impacts on your organisation. Analysis of consumer demand Cost analysis Market structure and

Q. What do you mean by Kinked Isoquant? This isoquant presumes only limited substitutability of labour andcapital. There are just a few processes for generating any one commodi

Market Structures This refers to the nature and degree of competition within a particular market.  Capitalist economies are characterised by a large range of different market

d/f b/w MRTS and MRS