The perfectly competitive industry's short-run market supply curve is the sum of:

Question

Quizplus · Accepted Answer

In a perfectly competitive market, each firm has no control over the market price and can only take the price as given. Therefore, the short-run market supply curve is the sum of the quantities that each firm will supply at every possible price. This is represented by option D. Option A is incorrect because firms will also supply at lower prices if the market price falls. Option B is incorrect because firms will not only supply at the lowest price but at every possible price. Option C is incorrect because firms will not supply below average variable cost in the short run, as this would result in a loss.

The Perfectly Competitive Industry's Short-Run Market Supply Curve Is the Sum