Consider the competitive market for steel. Assume that, regardless of how many firms are in the
industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost
(ATC), and average variable cost (AVC) curves shown on the following graph.
COSTS (Dollars per ton)
QUANTITY (Thousands of tons)
The following diagram shows the market demand for steel.
Use the orange points (square symbol) to plot the initial short-run industry supply curve when
there are 10 firms in the market. (Hint: You can disregard the portion of the supply curve that
corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 20firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 30 firms.