Firm and Industry Supply in the Short-Run

This chapter analyzes the output of a competitive industry in the short run. “Competitive” refers to the market structure in which each firm in the industry is a price taker. No single firm’s output level appreciably affects the market price. The chapter begins by combining the implications of the firm’s output selection for cost with the implications for revenue. We assume that the firm’s goal is to earn maximum profit per time period, and we examine the conditions necessary for achieving this goal.