Question

A perfectly competitive short-term industry supply curve is the vertical sum of the marginal cost curves of individual companies above the ATC.

True Or False？

Answer 1

False.

Explanation :

Short‐run supply curve :

The firm's short‐run supply curve is the portion of its marginal cost curve that lies above its average variable cost curve. As the market price rises, the firm will supply more of its product, in accordance with the law of supply. If, however, the market price, which is the firm's marginal revenue curve, falls below the firm's average variable cost, the firm will shut down and supply zero output.

The firm's short‐run supply curve is the portion of the marginal cost curve labeled. The market short‐run supply curve, like the market demand curve, is simply the horizontal summation of all the individual firms' short‐run supply curves.

answered by: anonymous