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
Question: (a) Under what conditions would a central bank be considered independent. (b) Discuss the effects of delegating monetary policy making to an independent agent on

Compare the price elasticity at two parallel demand curves at a given price. This has been explained in Fig above where two demand curves AB and CD are given that are parallel to e

Economics contributes a great deal with towards the performance of managerial duties and responsibilities. Just as biology donates to the medical profession and physics of engineer

Assume that input prices are constant at r = 1, w = 1, with technology which consists of 5 processes having the following properties: Process Inputs Capital (machine hours)

Substitution Effect on law of demand When price of a commodity falls it becomes comparatively cheaper if price of all other related goods, particularly of substitutes, remain c

Q. Describe the Public Utility Monopoly? Public Utility Monopoly:   Governmental authorities seize complete management and control of some utilities to protect social interest

Macro-economic policy objectives The major macro-economic policy objectives which the governments strive to achieve are: i. Full employment One of the main objectives

Your discussion assignment this week is associated with the Pilgrim Bank case. Using the attached file, answer the following questions: A. Is there a difference in profitability ac

State the difficulties in the measurement of profit.

define scarcity and opportunity cost.Show how these concept are useful in managerial decision making