ECN 102 Lecture Notes - Lecture 28: Market Price, Perfect Competition, Oligopoly
Document Summary
Industry supply curve: shows the relationship between the price of a good and the total output of the whole industry. Difference between individual supply curve of a firm and the supply curve of the industry as a whole. In the short run, the number of producers in an industry is fixed there is no entry or exit. Industry supply curve is the horizontal sum of the individual suppliers at every given price. Short-run industry supply curve: shows how the quantity supplied by an industry depends on the market price given a fixed number of producers. Short-run market equilibrium: when the quantity supplied equals the quantity demanded, taking the number of producers as given. Long run can look different because producers can enter or exit in the industry. Whenever existing producers are making a profit (whenever the market price is above the breakeven price), additional producers will enter the industry. Short-run industry supply curve will shift to the right.
