Market Supply Curve

Market Supply Curve - output Q Since for smaller output...

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Market Supply Curve: Before we analyze the long run market equilibrium of a competitive industry let us begin with the demand and supply curves. The market demand curve under competitive industry conditions is downward sloping. Its supply curve is governed by the cost structure. In Figure 35 we have Average and Marginal Cost curves of a firm. Marginal Cost curve intersects Average Total Cost curve at a minimum point. A rational profit maximizing firm is supposed to arrive at a point such as S and produce
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Unformatted text preview: output Q. Since for smaller output levels Average Cost is still falling and for larger output levels Average Cost is rising, at initial point S Average Cost C 1 = Price P. At price P a firm’s supply is Q. If a firm is required to make additional supply such as Q 1 it will expect to cover its additional or Marginal Cost as S 1 = C 1 . Supply will increase only when C 1 = price P 1 in the market i.aspsing....
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This note was uploaded on 11/26/2011 for the course ECONOMIC ec 201 taught by Professor - during the Fall '10 term at Montgomery.

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Market Supply Curve - output Q Since for smaller output...

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