A perfectly competitive firm has a horizontal supply curve in the short run.

Question

Quizplus · Accepted Answer

In the short run, a perfectly competitive firm's supply curve is upward sloping, not horizontal. This is because the firm will only be able to increase its output by increasing the variable inputs (such as labor and materials) which have a cost. As a result, the marginal cost of producing additional units of output will generally increase, resulting in an upward sloping supply curve.

A Perfectly Competitive Firm Has a Horizontal Supply Curve in the Short