Google
Wednesday 
February 21, 2024 

AmosWEB means Economics with a Touch of Whimsy!

AmosWEBWEB*pediaGLOSS*aramaECON*worldCLASS*portalQUIZ*tasticPED GuideXtra CrediteTutorA*PLS
LONG-RUN EQUILIBRIUM, MONOPOLISTIC COMPETITION: Relative freedom of entry and exit ensures that, in the long run, every firm in a monopolistically competitive industry earns exactly a normal profit, receiving neither an economic profit, nor incurring an economic loss. This result is achieved because entry and exit affects the market supply curve, which affects the overall market price, each firm's demand curve, and the range or prices it can charge. Each firm's demand curve adjusts until the profit-maximizing price is exactly equal to average total cost (both short run and long run).

Visit the GLOSS*arama


SUPPLY BY A FIRM:

The range of quantities of a factor that a firm is willing and able to sell at a range of factor prices. Supply by a firm is a phrase that is most relevant to the study of factor markets, especially when contrasted with supply to a firm. Supply by a firm puts the firm on the selling side of the factor market. Supply to a firm puts the firm on the buying side of the factor market.
The distinction between "supply by a firm" and "supply to a firm" is most important for produced factors of production, especially the vast array of capital goods. The importance comes from the possible confusion over which side of the factor market a firm is on. This confusion results as much as anything from the notion that firms are typically on the supply-side of the product markets and the demand-side of factor markets. However, firms also appear on the supply-side of factor markets.

To illustrate this notion of "supply by a firm," consider the production of Quadra 9000 computers by the innovative folks at Quadra DG Computer Works. Standard operating procedure for Quadra DG Computer Works is to produce Quadra 9000 computers according to the standard principles of production and cost (law of diminishing marginal returns, profit-maximization, etc.). It then supplies these computers to consumers, like Duncan Thurly, residing in households all over the economy, through product markets (stores, mail order, etc.). Quadra DG Computer Works does the supplying of Quadra 9000 computers and the relevant phrase is "supply by a firm."

The phrase "supply by a firm" is also relevant if Quadra DG Computer Works supplies Quadra 9000 computers as capital goods rather than consumer goods. When Quadra 9000 computers are used as capital goods and they are considered a factor of production. For example, Quadra 9000 computers are an important productive factor for cellular telephone communication services offered by Digital Distance Wireless Telecommunications, for the fabrication of Flex-Star Interactive Trophy Plaques, and for the automated assembly of OmniMotors XL GT 9000 Sports Coupe automobiles.

When Quadra DG Computer Works supplies Quadra 9000 computers to Digital Distance Wireless Telecommunications, Flex-Star Interactive Trophy Plaques, and OmniMotors XL GT 9000 Sports Coupe, then the relevant phrase is also "supply by a firm."

The phrase "supply to a firm," however, is relevant from the other side of this computer market. From the viewpoint of Digital Distance Wireless Telecommunications, computers are being supply TO, not FROM. They are the buyers in this factor market. This supply to a firm involves the "supply" of Quadra 9000 computers, with the "to a firm" being Digital Distance Wireless Telecommunications.

The distinction between "supply by a firm" and "supply to a firm" is particularly important in terms of market control. For a perfectly competitive seller, the supply by a firm, that is the firm's supply curve, is the firm's marginal cost curve above average variable cost. For a monopoly, in which the seller has complete control over the selling-side of the market, then the supply by a firm is whatever the monopoly supplies, which may or may not follow a standard positively-sloped supply curve. For imperfectly competitive firms, including oligopoly and monopolistic competition, supply by a firm is corresponding portions of the overall market supply controlled by each firm.

By way of comparison, for a perfectly competitive buyer, "supply to a firm" is a perfectly elastic, horizontal supply curve. For a monopsony, in which the buyer has complete control over the buying-side of the market, then the supply to a firm is the overall market supply, which is typically positively sloped. For imperfectly competitive firms, including oligopsony and monopsonistic competition, supply to a firm is corresponding portions of the overall market supply.

<= SUPPLYSUPPLY CURVE =>


Recommended Citation:

SUPPLY BY A FIRM, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2024. [Accessed: February 21, 2024].


Check Out These Related Terms...

     | supply to a firm | factor supply | factor supply curve | factor supply determinants | mobility | geographic mobility | occupational mobility |


Or For A Little Background...

     | supply | supply curve | market supply | product markets | resource markets | factor market analysis | marginal factor cost | marginal factor cost curve | factors of production | market control | market structures | circular flow |


And For Further Study...

     | marginal revenue product | marginal revenue product curve | factor demand | monopsony | bilateral monopoly | oligopsony | monopsonistic competition | aggregate supply | money supply |


Search Again?

Back to the WEB*pedia


APLS

BROWN PRAGMATOX
[What's This?]

Today, you are likely to spend a great deal of time wandering around the shopping mall trying to buy either several magazines on time travel or 500 feet of telephone cable. Be on the lookout for defective microphones.
Your Complete Scope

This isn't me! What am I?

Only 1% of the U.S. population paid income taxes when the income tax was established in 1914.
"No man, for any considerable time, can wear one face to himself and another to the multitude without finally getting bewildered as to which may be true."

-- Nathanial Hawthorne, Author

CES
Constant Elasticity of Substitution
A PEDestrian's Guide
Xtra Credit
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.

User Feedback



| AmosWEB | WEB*pedia | GLOSS*arama | ECON*world | CLASS*portal | QUIZ*tastic | PED Guide | Xtra Credit | eTutor | A*PLS |
| About Us | Terms of Use | Privacy Statement |

Thanks for visiting AmosWEB
Copyright ©2000-2024 AmosWEB*LLC
Send comments or questions to: WebMaster