The horizontal sum of marginal cost curves (above AVC) of all the firms in an industry is the short-run industry supply curve.

Question

Quizplus · Accepted Answer

The short-run industry supply curve is derived by horizontally summing the marginal cost curves of all firms in the industry, above the point where the marginal cost curve intersects the average variable cost curve, because firms will only supply output when the price covers their average variable costs.

The Horizontal Sum of Marginal Cost Curves (Above AVC) of All