1
$\begingroup$

I get the basic intuition that at higher prices, produces would be willing to produce more, but I feel like theory can only take my understanding so far. I want to know what are the real world determining factors for supply curves. At the risk if making the question too broad, I would like to look at 3 common text book supply curves: flat line, upward sloping and exponential: enter image description here

Example

Actually I'm not focused on any one particular industry, but to keep the scope within reason, let's assume the industry is a classic one: car production. Let's say there are three companies in this car industry and each company has a different supply curve, just like the ones pictured above.

Question

If we could peek under the hood of these car companies' inner workings (pardon the pun) what major differences would we find? That is to say, given each company has a differently shaped supply curve, what is likely to be different about the companies?

Note: I'm not after an exhaustive list; I think just a handful of well-articulated points would allow me to connect the dots. You can expand on whatever you think is most suitable (technology, distribution, government regulation, market segmentation, ect)

$\endgroup$
  • $\begingroup$ The place in a textbook where I would expect to see a flat supply curve is in the long-run analysis of an industry with many small firms having identical U-shaped cost curves, so that changes in demand result in firms entering or leaving the industry. Have you actually seen a flat supply curve for an individual company? $\endgroup$ – Adam Bailey Jan 11 at 9:39

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Browse other questions tagged or ask your own question.