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Short-Run Market Supply Curve
shows the amount of output that the industry will produce in the short run for every possible price.
Industry’s Output
the sum of the quantities supplied by all of its individual firms.
upward
Increasing input prices shifts a firm’s marginal cost curve ___.
The price elasticity of market supply
measures the sensitivity of industry output to market price.
positive
The short-run elasticity supply is always ___.
low
When marginal cost increases rapidly in response to increases in output, the elasticity of supply is ___.
Perfectly inelastic supply
arises when the industry’s plant and equipment are so fully utilized that greater output can be achieved only if new plants are built
Perfectly Elastic Supply
arises when marginal cost is constant
Consumer Surplus
the difference between the maximum that a person would pay for an item and its market price.
Producer surplus
the sum over all units produced of the differences between the market price of the good and the marginal cost of production. measures the area above a producer’s supply curve and below the market price
Variable profit/producer surplus
Revenue - Variable Cost
Total Profit
Revenue - VC - FC
