11. Perfect Competition
Market Supply Curve in the Short Run and Long Run
객관식
The market supply curve for a product is derived from the individual firm supply curves by:
A
Vertically summing the prices at which each firm is willing to supply a given quantity
B
Averaging the individual firm supply curves
C
Horizontally summing the quantities supplied by all firms at each price level
D
Selecting the supply curve of the largest firm in the market
검증된 단계별 안내1
Understand that the market supply curve represents the total quantity of a product that all firms in the market are willing to supply at each price level.
Recall that individual firm supply curves show the quantity a single firm is willing to supply at different prices.
To derive the market supply curve, for each given price, add up the quantities supplied by all individual firms. This process is called horizontal summation because you sum quantities (on the x-axis) across firms at the same price (on the y-axis).
Mathematically, if \(Q_i(P)\) is the quantity supplied by firm \(i\) at price \(P\), then the market supply \(Q_{market}(P)\) is given by:
\[Q_{market}(P) = \sum_{i=1}^n Q_i(P)\]
Avoid confusing this with vertical summation, which would involve adding prices for a given quantity, or averaging supply curves, which does not correctly represent total market supply.
