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In a perfectly competitive industry in which firms have U-shaped average cost curves, the long-run market supply curve is a horizontal line. This market supply curve is not the horizontal sum of individual firms’ long-run supply curves. In this respect, the long-run market supply curve differs from the short-run market supply curve, which, in a perfectly competitive industry, will equal the horizontal sum of individual firms’ short-run supply curves. Why does the derivation of the long-run market supply curve differ from the derivation of the short-run market supply curve?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91240375

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