A short-run market supply curve in a competitive industry is derived by:
A)multiplying the quantity supplied by each identical firm in the industry times the number of firms at each relevant price.
B)multiplying the quantity supplied by each differentiated firm in the industry times the number of firms at each relevant price.
C)adding market supply and market demand at each relevant price.
D)not usually upward sloping.

Question

Quizplus · Accepted Answer

In a competitive industry, each identical firm will have the same short-run marginal cost curve, so their quantity supplied will increase as the price increases. Therefore, to derive the short-run market supply curve, we simply add up the quantity supplied by all the identical firms at each relevant price. This is done by multiplying the quantity supplied by each identical firm in the industry times the number of firms at each relevant price. The short-run market supply curve in a competitive industry is derived by horizontally summing the individual firms' supply curves, which involves multiplying the quantity supplied by each identical firm in the industry times the number of firms at each relevant price.

A Short-Run Market Supply Curve in a Competitive Industry Is