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
Explain the Theory of Production Cost and Production analysis is central for the unhampered functioning of the production process and for project planning. Production is an e

Measuring Point Elasticity on a Non-linear Demand Curve Let's now explain the method of measuring point elasticity on a non-linear demand curve. Assume we want to measure the

Features of Free Market System The features of a free market system are: (i)         Ownership of Means of Production Individuals are free to own the means of producti

a)      In 1948, the money GNP was $520 billion and the price index was 120.  In order to   make the 1948 GNP comparable with the base year, the 1948 GNP must be adjusted    to:

Demand-pull inflation is when aggregate demand exceeds the value of output (measured in constant prices) at full employment.  The excess demand of goods and services cannot be met

FACTORS AFFECTING THE ABILITY OF TRADE UNIONS TO GAIN LARGER WAGE INCREASES FOR ITS MEMBERS The basic factor is elasticity of demand for the type of labour concerned.  The ela

Economics has two major branches: (1) micro economics, and (2) both micro and macro economics theories. The parts of micro and macro economics that constitute managerial economics

INTERNATIONAL TRADE Definition It is the exchange of goods and services between one country and another.  International Trade can be in goods, termed visibles or in servi

What do you mean by the fiscal policy? What are the instruments of fiscal policy? Briefly comment on India's fiscal policy.