Lecture17 - Lecture 17 Short run industry supply...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
Lecture 17 Short run industry supply elasticity, long-run profit maximization, long-run competitive equilibrium, producer surplus
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Output adjusts down to the shift in the marginal cost curve MC1 MC2 p1 p2 q1 q2 q3 Input price increase
Background image of page 2
Short-run industry supply elasticity In the short-run, an individual firm will set marginal cost equal price. Short-run supply elasticity for a firm is measured along the firm’s marginal cost curve. If all firms increase production, input prices will, in general, increase, resulting in a shift of each firm’s marginal cost curve, and a decrease, for each firm in output associated with the increase in the market price. As a result, the industry short-run supply curve does not respond as quickly to the increase in market price as do each firm’s short-run supply curves, or, industry short run supply is less price elastic than a firm’s short run supply .
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Long-run supply in a competitive industry Long-run supply is characterized by:
Background image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 01/17/2012 for the course ECON 100A taught by Professor Safarzadeh during the Fall '09 term at UC Irvine.

Page1 / 15

Lecture17 - Lecture 17 Short run industry supply...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online