In a perfectly competitive market in which all firms have identical cost structures, the short run supply curve is _______ and the long run supply curve is _______.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, the short run supply curve is upward-sloping due to increasing marginal costs. In the long run, firms can enter or exit the market freely, leading to a perfectly elastic supply curve as firms will enter the market if economic profits exist and exit if losses are incurred, stabilizing the price.

In a Perfectly Competitive Market in Which All Firms Have