--The SR Market Supply Curve As long as P ≥ AVC, each firm will produce its...
--The SR Market Supply Curve
As long as P ≥ AVC, each firm will produce its profit-maximizing quantity, where MR = MC.
At each price, the market quantity supplied is the sum of quantities supplied by all firms.
Explain and give an example
Homework Answers
The firms in the short run produce if they are able to cover their variable cost.The shutdown point for the firm is the minimum of AVC point.The profit maximizing condition for the firm is given as P=MC=MR=AR.
As long as the price is greater than or equal to the minimum AVC,the firm will produce as they will be able to cover their variable costs.
The market supply schedule is found by adding together the supply of each individual firm at each given price level.
Example if X supplies 10 units and Y supplies 15 units at P=10,then the market supply at P=10 will be 10+15 = 25 units.
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--The SR Market Supply Curve
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