"An industry's short-run supply curve is constructed by adding horizontally all the average variable cost curves of firms in that industry." Do you agree or disagree? Why?
What will be an ideal response?
Disagree. An industry's short-run supply curve is constructed by summing horizontally all of the individual firms' supply curves, which are their marginal cost curves (not average cost curves) above their respective minimum average variable cost points.
You might also like to view...
Rational expectations imply
a. markets always clear. b. that prices are "sticky" c. policy that is unpredictable is irrelevant to economic outcomes. d. both a and c. e. None of the above.
An increase in the marginal physical product of capital increases the demand for loanable funds
Indicate whether the statement is true or false
Consider the demand curve above. If area 0ABCÂ is smaller than area 0DEF, we may conclude that demand in this range is:
A. income-elastic. B. price-elastic. C. price-inelastic. D. income-inelastic.
Behavioral economics:
A. draws on insights from psychology to expand models of individual decision making. B. draws on insights from business theory to expand models of household behavior. C. draws on insights from anthropology to clarify models of individual decision making. D. is the least disputed field of economics.