If the price a consumer is willing to pay rises, then the supply curve extends. If more firms join the market (because the price has risen therefore making the profits larger) the supply curve extends - or does it shift?If, as a firm produces more, it gets economies of scale, then the average costs fall so is that an extension or a shift in supply?
If the supply curve shifts outwards then the prices fall - so won't supply contract?
If more firms join the market, the supply curve probably will shift.
ReplyDeleteIf the firm pruduces more because it gets economies of scale, therefore the supply curve will shift.