Question

In a perfectly competitive industry, the industry supply curve is the sum of the -------.

a. average total cost curves of all the individual firms

b. supply curves of all the individual firms

c. average variable cost curves of all the individual firms

d. average fixed cost curves of all the individual firms

Answer 1

Answer:

In a perfectly competitive industry, the industry supply curve is the sum of the ' supply curves of all the individual firms'.

Explanation:

Under perfect competition, the supply curve of the industry is the lateral summation of that part of the short-run marginal cost curves of the firms. The supply curve of the industry lies above the average variable cost and constitutes the supply curve of the industry.

Hence, the correct answer is option b. supply curves of all the individual firms.

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