If firms in a competitive market are not identical,then the long-run market supply curve will be
A) horizontal.
B) upward sloping.
C) downward sloping.
D) undetermined.

Question

Quizplus · Accepted Answer

In a competitive market, if firms are not identical, some firms will be more efficient than others. The more efficient firms will have lower costs and will be able to produce at a lower price than the less efficient firms. As a result, in the long run, less efficient firms will exit the market, while more efficient firms will increase their production. This means that the long-run market supply curve will be upward sloping, reflecting the increasing production costs of the remaining firms.

If Firms in a Competitive Market Are Not Identical,then the Long-Run