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The short-run individual firm's supply curve is made up of the zero-profit equilibrium levels of output as the industry expands due to entry.
Supply Curve
A graph illustrating how much of a product a firm will sell at different prices.
Zero-Profit Equilibrium
A situation in competitive markets wherein, due to free entry and exit, firms only earn a normal profit, which is their lowest level of profit necessary to keep them in business.
Industry Expands
The process of a sector growing in size through increased production, possibly due to higher demand or technological advancements.
- Evaluate the influence of market entry and exit on the supply environment of the industry.
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Learning Objectives
- Evaluate the influence of market entry and exit on the supply environment of the industry.
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