Question

Will, Jill, and Phil are all wheat farmers. The wheat industry is perfectly (purely) competitive. The first chart shows how much each farmer produces at different price levels. The second chart shows each farmer's minimum average total cost (ATC), average variable cost (AVC), and marginal cost (MC).

Answer 1

The short run supply is where P=MC such that P is above the AVC (ie above AVC minimum). The table for short run supply would be as below.

Price	Will	Jill	Phil	Total (Short run Supply)
$2	4	2	0	6
$4	6	4	2	12
$6	9	5	4	18
$8	12	8	6	26

The short run supply would be the sum of the production level of all three at each price.

The long run supply would be at the minimum of the ATC. The table would be as below.

Price	Will	Jill	Phil	Total (Short run Supply)
$2	0	0	0	0
$4	6	0	0	6
$6	9	5	0	14
$8	12	8	6	26

The long run supply would be where the minimum (possible) price is greater than the (minimum of) ATC. The graph would be as below.

Short Run Phil Short Run Supply Long Run Supply Price 1 - N Will 2 4 6 8 Jill 4 6 9 12 Boa 2 4 5 8 Price 0 2 4 6 Short Run Supply 2 6 4 12 6 18 8 26 con 00 Jill Will Min ATC2 Phil 5 .5 7 Price 1 2 3 4 5 6 7 8 9 2 3 6 7 4 5 Long Run Supply - Short Run Supply con Long Run Supply 2 0 4 6 6 14 8 26

Answer 2

The difference between short run and long run supply is that suppliers who have ATC>price will not produce anything in that price. The corresponding table and graphs are below -

Short Run Phil Short Run Supply Long Run Supply Price 1 - N Will 2 4 6 8 Jill 4 6 9 12 Boa 2 4 5 8 Price 0 2 4 6 Short Run Supply 2 6 4 12 6 18 8 26 con 00 Jill Will Min ATC2 Phil 5 .5 7 Price 1 2 3 4 5 6 7 8 9 2 3 6 7 4 5 Long Run Supply - Short Run Supply con Long Run Supply 2 0 4 6 6 14 8 26