We must now introduce into our analysis the effects upon the costs of a firm of an increase in the scale of the industry. In order to draw up a supply curve it is always necessary to make some assumption about the movement of the individual demand curves of the firms, and on every possible assumption there is a different supply curve. The simplest assumption that can be made about the individual demand curves is that they are horizontal and that they always move upward and downward without changing their slope. In short, the simplest assumption to make is that competition is perfect. To isolate the effects of a change in the scale of the industry upon costs it is therefore convenient to discuss the case of a perfectly competitive industry. Under perfect competition, as we saw in Chapter 7, the firms must be of optimum size when profits are normal.