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.

Posted Date: 11/27/2012 5:53:47 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
Assume a floating exchange rate system. The Fed pursues an expansionary monetary policy. Draw how this would look on the graphs below. Mark the new equilibriums. Complete the table

Consider the following hypothetical story: Last spring, there was an outbreak of a nasty disease known as cyclosporiasis, which was eventually traced to Guatemalan raspberries. Tog

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

Using the relationship among the price of a visit to a physiotherapist and the quantity of visits demanded, explain and distinguish between the direction, the slope, and the positi

Equilibrium National Income in a Frugal Economy Saving and investment are examples of two categories of expenditure called withdrawals and injections.  A WITHDRAWAL is any inc

It is presumed that every of the different combinations of capital and labour displayed in Table produces the same level of output, which is, 20 units. Combinations are such that i


Ask questiHow does economic theory contribute to managerial decisions? on #Minimum 100 words accepted#

Blowing Safety Co. P/L manufactures safety parachutes for the airline industry. These are sold directly to the airline companies. Management expects to manufacture and sell around

Determine the Specific Place of demand The demand should relate to a specific market as well. For instance, every year in the town of Dehradun, demand for school bags is 4,000