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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

The supply curve is horizontal for a factor price taker; however, the industry supply curve is upward sloping. Explain why this occurs.

To determine

Reasons for the horizontal supply curve of the firm and upward sloping supply curve of an industry.

Explanation

Factor price taker refers to a firm that can purchase the factors of production at the equilibrium price and faces perfectly elastic factor supply curve. This is because the firm can purchase as much factors at the market price and comparatively small amount of labor is needed for those...

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