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The long-run market supply curve in a competitive market will: A
The long-run market supply curve in a competitive market will:
A. be the portion of the MC that lies above the minimum of AVC for the marginal firm.
B. always be horizontal.
C. typically be more elastic than the short-run supply curve.
D. be above the competitive firm's efficient scale.
Expert Solution
The long-run market supply curve in a competitive market will:(C) typically be more elastic than the short-run supply curve.
The firm's supply curve will become more elastic over time. This is because over time, the firm will have the ability to shift production to more-profitable goods. So while they may not be able to increase quantity supplied by much in the short run in response to an increase in price, they will be able to adjust production in the long run, leading to a bigger increase in the quantity demanded.
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