If all firms in a market are identical, have upward sloping marginal cost curves, and input prices are perfectly elastic, then the competitive long-run market supply curve will be:

Question

Quizplus · Accepted Answer

In the long run, firms can enter or exit the market based on whether they are making a profit or a loss. Since all firms are identical and have the same cost structure, they will all enter or exit the market at the same price. This means that as more firms enter or exit the market, the market supply will not change. Therefore, the competitive long-run market supply curve will be horizontal.

If All Firms in a Market Are Identical, Have Upward