The short-run supply curve for a perfectly competitive industry:
A)is less elastic than the long-run industry supply curve.
B)is derived by vertically summing the individual firms' marginal cost curves.
C)reflects zero economic profits at all points on the curve.
D)is typically upward sloping.

Question

Quizplus · Accepted Answer

The short-run supply curve for a perfectly competitive industry is typically upward sloping. This is because, in the short run, firms can only adjust production by changing their variable inputs, such as labor and materials. Therefore, as the market price of the good increases, firms will increase their output to take advantage of the higher profits. However, since some inputs are fixed in the short run, each additional unit of output will require increasingly more costly variable inputs, which results in an upward sloping supply curve.

The Short-Run Supply Curve for a Perfectly Competitive Industry