Industry''s long-run supply curve, Microeconomics

The Industry's Long-Run Supply Curve

* Long-Run Elasticity of Supply

  1) Constant-cost industry

  • Long run supply is horizontal
  • Small increase in price will induce extremely large output increase
  • Long run supply elasticity is considerably large
  • Inputs would be available readily

  2) Increasing cost industry

  • Long run supply is sloping upward and elasticity is positive
  • The slope will depend on rate of increase in input cost
  • Long run elasticity will usually be greater than short run elasticity of supply
Posted Date: 10/12/2012 5:52:19 AM | Location : United States

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