The short-run industry supply curve slopes up because

Question

Quizplus · Accepted Answer

The law of diminishing marginal product states that as more units of a variable input, such as labor, are added to a fixed input, such as capital, the additional output from each additional unit of the variable input will eventually decrease. In the short run, firms are unable to adjust their fixed input, and therefore must continue to add variable inputs. This results in diminishing marginal product and increasing marginal cost, causing the upward slope of the short-run industry supply curve.

The Short-Run Industry Supply Curve Slopes Up Because