![]() These quantities will be called supply or output of industry. Similarly at OP 1 price, all the firms of industry are producing 100 xM 1 =100M 1 quantity of output. (ii) Short Run Supply Curve of an Industry: This firm’s short run supply curve starts from A upwards i.e., thick line AB. If price goes up to OP1, the firm will produce OM1 output. In this case, firms’ marginal revenue and marginal cost cut each other at A, OM is equilibrium output. At price less than OP, the firm will not be covering its average variable cost. 1 it is clear that there is no supply if price is below OP. Bilas has defined it in simple words, “The Firm’s short period supply curve is that portion of its marginal cost curve that lies-above the minimum point of the average variable cost curve.” However, short run supply curve of a firm can be shown with the help of fig. Ferguson, “The short run supply curve of a firm in perfect competition is precisely its Marginal Cost Curve for all rates of output equal to or greater than the rate of output associated with minimum average variable cost.” Short run supply curve of a perfectly competitive firm is that portion of marginal cost curve which is above average variable cost curve. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |