文档介绍：Chapter Twenty-Three
Industry Supply
Supply From petitive Industry
How are the supply decisions of the many individual firms in petitive industry to bined to discover the market supply curve for the entire industry?
Supply From petitive Industry
Since every firm in the industry is a price-taker, total quantity supplied at a given price is the sum of quantities supplied at that price by the individual firms.
Short-Run Supply
In a short-run the number of firms in the industry is, temporarily, fixed.
Let n be the number of firms; i = 1, …,n.
Si(p) is firm i’s supply function.
Short-Run Supply
In a short-run the number of firms in the industry is, temporarily, fixed.
Let n be the number of firms; i = 1, …,n.
Si(p) is firm i’s supply function.
The industry’s short-run supply function is
Supply From petitive Industry
p
S1(p)
p
S2(p)
Firm 1’s Supply
Firm 2’s Supply
Supply From petitive Industry
p
S1(p)
p
S2(p)
p
p’
p’
S1(p’)
S1(p’)
Firm 1’s Supply
Firm 2’s Supply
S(p) = S1(p) + S2(p)
Industry’s Supply
Supply From petitive Industry
p
S1(p)
p
S2(p)
p
S(p) = S1(p) + S2(p)
p”
p”
S1(p”)
S1(p”)+S2(p”)
S2(p”)
Firm 1’s Supply
Firm 2’s Supply
Industry’s Supply
Supply From petitive Industry
p
S1(p)
p
S2(p)
p
Firm 1’s Supply
Firm 2’s Supply
S(p) = S1(p) + S2(p)
Industry’s Supply
Short-Run Industry Equilibrium
In a short-run, neither entry nor exit can occur.
Consequently, in a short-run equilibrium, some firms may earn positive economics profits, others may suffer economic losses, and still others may earn zero economic profit.