The Supply Schedule of a Single Firm Under Perfect Competition
The object of this chapter is to examine the nature of the short-period supply curve and the general conditions of equilibrium in an industry producing in a state of perfect competition. As in the case of long-period equilibrium, a satisfactory solution can be obtained only by subjecting to analysis the behaviour of the individual firm.1
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- 3.Dr Kreps quotes W. K. Lewis (Chemical and Metallurgical Engineering, vol. 28: 988, 1923), who points out how unreasonable it is to judge managerial efficiency by the level of unit cost. The business man who regards as the optimum level of output that level of output at which unit cost is a minimum will, of course, be producing too little if he is making a profit and too much if he is making a loss. This is merely a special instance of the general effects of failure to comprehend the marginal principle. How far the prevalence of such failure will affect the general conditions of supply is discussed in a later chapter.Google Scholar