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Consider such a firm in the short run, when labour is the only variable input.

Consider such a firm in the short run, when labour is the only variable input. If the firm faces a product price, P, which it cannot alter by changing its output, will it have an upward-sloping product supply curve or will its short-run supply curve be downward-sloping? Will an increase in demand cause P to rise by more, less, or the same as the demand increase? You may assume diminishing returns to labour and constant returns to scale in production. 

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The firm has an upward sloping supply curve because of diminishing... View the full answer

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The product supply curve of the firm will be upward sloping. This is because the firm... View the full answer

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