Long term supply curve and economic profit | Microeconomics | Khan Academy

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Understanding the long term supply curve in terms of economic profit
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[@behindtheline40]

thank you sal. My midterm is in an hour. your really simplifying what my prof complicates.

[@josephgibson9783]

Me except final

[@veninsta1314]

THANK YOU

[@nancytello11]

I love your videos!!

[@olivezoo]

well presented

[@karkulajda]

Can be the supply curve in the long-term sloping down if the production costs decrease constantly? My materials say that yes, however I cannot imagine that. Thank you!

[@utkarshpande11]

yes, the professor made a mistake of sounding here..it is still a short run supply curve. only it shows that in the short-run they are ready to produce whatever the market demands and hence a horizontal supply line sentially..

[@peter9910]

I don't understand why he's saying here that all firms have the same economic profit breakeven. This means that lower margin firms have exponentially higher opportunity cost, which ofc makes no sense. Anyone know?

[@nemesis4go10]

Khaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaan!

[@mli3793]

Nahh just borrow money at 0% interest rate and you can sell the quantity you want

[@Sask321]

there is no demand curve in competitive market ahhhhhh

[@msrajawat2830]

Please use Indian assent .

[@beingWantable]

OK now I'm confused my economic book says on the long run the supply curve is vertical... but this makes way more sense...

[@user-wc6ym1cm8i]

its Aggregate supply of GDP that is vertical The horizontal one is micro econ

[@johnchristopher8396]

this does not make sense to me. the supply curve would imply that some suppliers would drop out of the market at lower price points. I can see his point that because of long term investments they might not drop right away. but if demand shifts to the left I would expect eventually some suppliers would drop out and the market would eventually clear at the new equalibrium price. his horizontal long term supply curve implies that all suppliers have the same economic break even point. they don't which is why the supply curve slopes up. if they all have the same indifference curve what is the point of the first supply curve? if any one can clarify this for me that would be great

[@marionm8213]

+John Christopher I agree with this, I thought the whole point of the LR being that firms that experience an economic loss can drop out and there will be less supply in the market for that lower price and we have a new equilibrium.

[@johnchristopher8396]

+Marion M Hi Marion. hopefully some on jumps in and clarifies.

[@marionm8213]

John Christopher I watched another video and it made sense. The supply curve he is drawing is in the SR and assumes all firms have identical technology. The fall in demand will decrease price and economic losses for some firms. In the LR, the adjustment is that these firms will fall, causing a decreasing in industry supply and therefore supply curve shifts leftward until the original price is reached but at a lower quantity. So in the LR the entire supply curve will be vertical because the price will be the same, but the quantities vary. I'm not sure why in the LR the price isn't allowed to move but I suppose it's just like every other economic scenario where shocks cause adjustments that lead back to the equilibrium. I hope it makes sense.

[@bharatdave8472]

Can you link to the said video?Is it in this playlist?

[@marionm8213]

Bharat Dave I'm sorry I don't remember it, but it should be in the playlist.