What determines the perfect competitor's supply curve? How is the industry supply curve found?
What will be an ideal response?
A supply curve shows the quantity supplied at various prices. The firm decides how much to supply at each price by equating price and marginal cost. Therefore, the marginal cost curve shows the quantity supplied at each price. However, at a price below the shutdown price, output is zero, so that portion of the marginal cost curve is not part of the supply curve. The industry supply curve is found by adding the quantities supplied of each firm for each price. It is the horizontal summation of the individual firms' supply curves.
You might also like to view...
Voting against ones preferences in the initial round of a runoff election in order to prevent the selection of an undesirable alternative in the final round is called
A) ballot manipulation. B) strategic voting. C) naive voting. D) the voting paradox.
If the minimum points of all the possible short-run average total cost curves become successively lower as quantity of output increases, then:
a. the firm should try to produce less output. b. total fixed costs are constant along the LRAC curve. c. there are economies of scale. d. the firm is probably having significant management problems. e. when output is doubled, total costs are doubled.
A disadvantage of using tax financing to fund an increase in government spending, which is designed to lower unemployment, is that
a. the taxes may absorb funds that would otherwise be used for consumption or investment. b. the taxes are unlikely to absorb funds that would otherwise be used for consumption or investment. c. a tax increase is likely to fuel inflation. d. the taxes may absorb funds that would otherwise be used to purchase imports.
Refer to Scenario 13.2 below to answer the question(s) that follow. SCENARIO 13.2: The government of Stratospheria is currently inviting investors to bid for the exclusive right to provide cable television service to its residents. The market demand for this service is P=55-0.01Q, where Q is the number of households that would subscribe to the cable service and P is the monthly fee charged to the subscribers. The associated marginal revenue curve is MR=55-0.02Q. Fun Cable Company is interested in bidding for the right to provide cable service in Stratospheria. It has a constant average and marginal cost of $5 for providing cable service to each household.Refer to Scenario 13.2. At what level of output (number of households) is Fun Cable Company's total revenue maximized?
A. 2,500 B. 2,750 C. 5,000 D. Indeterminate from the given information.