The Theory Of The Firm Under Perfect Competition

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If price of an input increases, cost of production rises resulting in an increase in marginal cost leading leftward shift of the MC curve. This means that the firm's supply curve shifts to the left.

If price of an input increases, cost of production rises resulting in an increase in marginal cost leading leftward shift of the MC curve. This means that the firm's supply curve shifts to the left.

Technological progress lowers down the firm's marginal cost at any level of output; ultimately leading to downward(rightward) shift of MC curve. As the firm's supply curve is essentially a segment of MC curve. Technological progress shifts the supply curve of the firm to the right.

Unit Tax: A unit tax is a tax that the government imposes per unit sale of output. The imposition of a unit tax shifts the supply curve of a firm to the left.

Supply Curves and Unit Tax. S₀ is the supply curve of a firm before a unit tax is imposed. After a unit tax of Rs t is imposed, S₁ represents the supply curve of the firm.