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supply curve


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A curve showing the amount that firms in an industry are willing to supply at each possible price. A supply curve is defined only if the firms are price-takers, who do not consider the effects of their own output on the price they can charge. With price on the vertical axis, the supply curve at any price is the horizontal sum of the marginal cost curves of the firms in an industry. The industry supply curve is at least as elastic as the supply of individual firms, and is more elastic if a rise in price induces more firms to enter the industry, or if a fall in price induces some existing firms to leave. See also backward-bending supply curve.

Subjects: Economics.


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