Intermediate Microeconomics · free preview
Short-Run Industry Supply
The industry supply curve is the horizontal sum of the firms' marginal cost curves above their shutdown points, and market equilibrium sets the price each firm then takes as given, the aggregation that closes the competitive model's short run.
1. Summing the firms
Summing the firms
2. Industry equilibrium
Industry equilibrium
3. Asymmetric firms and the margin
Asymmetric firms and the margin
4. The short run defined
The short run defined
5. The aggregation rule
How is short-run industry supply constructed from the firms?
6. The worked equilibrium
Demand Q equals 100 minus 10p, supply Q equals 40p. What is the equilibrium?
7. Flatness of the sum
Why is industry supply flatter than any firm's supply curve?
8. The margin firm
What characterizes the marginal firm in an industry of heterogeneous costs?
9. Industry supply slope
With 80 firms each supplying q equals p over 2, compute industry supply Q at p of 3, and write the number.
10. Demand at the equilibrium price
Compute demand Q equals 100 minus 10p at p of 2, and write the number.
11. Demand slightly higher
With demand Q equals 100 minus 10p, what is quantity demanded at p of 2.5?
12. One firm's share
At the equilibrium price of 2, what does each of the 80 identical firms supply?
13. Entry presses the price
Suppose 20 more firms enter, 100 total, each still supplying q equals p over 2. Where does the equilibrium move?
14. Industry supply lower
What is industry supply at p of 1.5 with the original 80 firms?
15. The representative firm's quantity
With each firm supplying q equals p over 2, compute the firm's output at p of 2, and write the number.
16. Industry supply at a low price
With 80 firms each supplying p over 2, compute industry supply Q at p of 1.5, and write the number.
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