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# Short Run Supply Curve of the Industry:

## Definition:

The short run supply curve of a competitive firm is that part of the marginal cost curve which lies above the average variable cost. As regards industry supply curve, it is the horizontal summation of the short run supply carves of the identical firms constituting an industry.

## Explanation:

The industry short run supply curve is briefly explained with the help of the diagram (15.8) below.

We assume here that prices of inputs do not change with the change in the size of the firm; However, when all firms increase or decrease output, the factor prices rise or fall respectively.

## Diagram:

In figure 15.8(a), we assume that at point P, price or marginal revenue equals marginal cost. The firm at equilibrium point P. (\$4) produces and sells 50 units of a commodity. If the equilibrium of MR, MC, price occurs at point K, the firm produces and sells 100 units.

In figure 15.8(b),  let us suppose that there are 100 firms in the industry. As all the firms by assumptions, have identical costs, the industry will be producing 5000 units at a market price of (\$4) and 10000 units at industrial price of (\$8). The industry supply curve, therefore, has a positive slope.

## Relevant Articles:

» Market Structure
» Perfect Competition
» Equilibrium of the Firm
» Short Run Equilibrium of the Price Taker Firm
» Short Run Supply Curve of a Price Taker Firm
» Short Run Supply Curve of the Industry
» Long Run Equilibrium of the Price Taker Firm
» Long Run Supply Curve For the Industry
» Price Determination Under Perfect Competition
» Market Price
» Determination of Short Run Normal Price
» Long Run Normal Price and the Adjustment of Market Price to the Long Run Normal Price
» Distinction/Difference Between Market Price and Normal Price
» Interdependent Prices
» Joint Supply
» Fixation of Railway Rates
»

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