Unformatted text preview: Economic Proﬁt —* New Economic Loss —> Existing
P Firms Enter Market P Firms Leave the Market Zero Economic Proﬁt -+
Firms Neither Enter nor
P Leave the Market Ewi‘rx} ()‘r \Fc‘v‘\~e\ ,."\'n(\ y \(e + ‘2 S'XUW C” g‘e Er'ci on \‘x by t u "m q *-
2. Entry and Exit and the Short Run Make: Supply Curve
As new ﬁrms enter/exit the market the short-run market supply curve will shift to the right/left.
As noted in the previous chapter on supply and demand, the market supply curve is simply the
summation of individual ﬁrm supply curves: In
'\=\ It follows that the addition/subtraction of a new ﬁrm will increase/decrease S, shifting the market
supply to the ﬁght/leﬁ. ...
View Full Document
- Spring '08