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ECON 1010 (72)
Chapter 3

ECON 1010 Chapter 3: Topics 13

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ECON 1010
Laura K.Brown

oS98 ECON101 0 Long Run Supply Curve Following the assumption there is a large number of firms all producing the same good and using the same technology. Hence, in the long run customers can buy as many units as they want at a price equal to the minimum ATC. Hence, long run supply curve for the whole market is going to be a horizontal line, with vertical intercept equal to the minimum average cost. In the short run, if there was an increase in demand; the market would adjust by increasing equilibrium price, MC goes up In the long run, an increase in demand would have no effect on the market when new suppliers enter the market, they effectively nullify the pressure on existing suppliers. Entry continues and the price remains stable at the level of the minimum ATC.
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