FIGURE 7-5 The Short-Run Market Equilibrium
imageThe short-run industry supply curve, S, is the industry supply curve taking the number of producersā€”here, 100ā€”as given. It is generated by adding together the individual supply curves of the 100 producers. Below the shut-down price of $10, no producer wants to produce in the short run. Above $10, the short-run industry supply curve slopes upward, as each producer increases output as price increases. It intersects the demand curve, D, at point EMKT, the point of short-run market equilibrium, corresponding to a market price of $18 and a quantity of 5,000 trees.