The Short-Run Supply Curve in a Price-Taking Industry Is the

question 443

Multiple Choice

The short-run supply curve in a price-taking industry is the

• A) horizontal summation of the individual firms' MC curves above ATC.
• B) horizontal summation of the individual firms' MC curves above AVC.
• C) horizontal summation of the individual firms' AVC curves above MC.
• D) vertical summation of ATC curves above AVC.

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Definitions:

Variable Costs

Costs that change in proportion to the level of production or sales activity, such as raw materials and direct labor.

Manufacturing Overhead

All indirect costs associated with the production of goods, such as utilities, maintenance, and manager salaries.

Committed Fixed Costs

Investments in facilities, equipment, and basic organizational structure that can’t be significantly reduced even for short periods of time without making fundamental changes.

Short Run

A period in economics during which the quantities of some inputs cannot be changed, limiting the capacity to adjust production levels.