Figure 8.9 Short-Run Industry Supply Curve When Firms Have Different Costs

In a four-firm industry, in which each firm faces different costs, these cost differences are reflected in their individual supply curves (S_{Firm A}, S_{Firm B}, S_{Firm C}, and S_{Firm D}). The industry supply curve, S_Industry, is the horizontal sum of the four individual firms’ supply curves. At prices between P₁ and P₂, only Firms A and B produce; at price P₂, Firm C also supplies its product on the market; and at price P₃, all four firms supply positive quantities.