![]() When demand increases from D 1D 1 to D 2D 2, price goes up from OP 1 to OP 2 and quantity from QQ 1 to QQ 2. In the diagram, the initial equilibrium price ( OP 1) is determined through the interaction between the demand ( D 1D 1) and the supply curve ( SS) ![]() ![]() How is the price in the short-run determined through the interaction of short-period supply and demand curve is shown in the following figure. But the supply is not stronger than the demand in the short-run. In other words, both the demand and the supply have impact on the price in the short-run. Thus, the supply of the industry can be increased only within the limit set by the plant capacity of the existing firms. The firms can increase the supply by intensively using the fixed equipments with increased employment of the variable factors. Thus, the number of firms in the industry cannot change in the short-run. Moreover, no new firm can enter into the industry or existing firm can quit the industry in the short-run. The firms cannot change its fixed factors i.e. The firms can vary its supply by changing the variable factors. The short-run is a period in which the firms can change its supply only upto a certain limit. Micro Economics Notes Short-run supply curve In this article we are going to discuss about Short-run and Long-run Supply curve Under Perfect Competition. ![]()
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