9.31. In a constant-cost industry in which firms have U-shaped average cost curves, the long-run market supply

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9.31. In a constant-cost industry in which firms have U-shaped average cost curves, the long-run market supply curve is a horizontal line. This market supply curve is not the horizontal sum of individual firms’ long-run supply curves. In this respect, the long-run market supply curve differs from the short-run market supply curve, which, in a constant-cost industry, will equal the horizontal sum of individual firms’ short-run supply curves. Why does the derivation of the long-run market supply curve differ from the derivation of the short-run market supply curve?

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Microeconomics

ISBN: 9780470563588

4th Edition

Authors: David Besanko, Ronald Braeutigam

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