Determination of quantity supplied by firm in perfectly competitive market in the short run: Difference between revisions
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{{quotation|The short run supply curve (where the optimal quantity produced is plotted as a function of market price) coincides geometrically with (part of) the marginal cost curve (where marginal cost is plotted as a function of quantity produced).}} | {{quotation|The short run supply curve (where the optimal quantity produced is plotted as a function of market price) coincides geometrically with (part of) the marginal cost curve (where marginal cost is plotted as a function of quantity produced).}} | ||
==Two interpretations of this determination== | |||
This determination can be interpreted in either of these ways: | |||
# The market price for the firm is known, and we are optimizing for the firm's quantity supplied. | |||
# We are determining the optimal ''functional'' relationship that describes the quantity supplied by the firm in terms of market price (i.e., the short run supply curve). | |||
With interpretation (2), interpretation (1) simply becomes the case where we have to determine ''one'' point on the curve. However, since the price coordinate for that point can be arbitrary, both interpretations require equivalent tasks. | |||
==Similar determinations== | ==Similar determinations== | ||