The long- run supply curve for a competitive industry shows:
A)the vertical summation of all MC curves.
B)the horizontal summation of all firms' LMC curves.
C)the quantity demanded at different prices with fixed input- prices.
D)a upward slope under decreasing returns to scale.

Question

Quizplus · Accepted Answer

The long-run supply curve for a competitive industry shows the horizontal summation of all the firms' LMC curves. Each firm's LMC curve indicates the minimum cost at which it can produce a given level of output in the long run. When these curves are horizontally summed, we get the long-run supply curve for the industry. It represents the minimum cost at which the industry can produce different levels of output in the long run.

The Long- Run Supply Curve for a Competitive Industry Shows