Explain how the market supply curve is derived. Does the law of supply apply to the market supply curve?
What will be an ideal response?
The market supply curve for a good can be found by summing the quantities supplied by all of the firms selling in the market for that good. Since all firms' supply curves are upward sloping (due to the law of supply), the market supply curve will also be upward sloping. Therefore, the law of supply does apply to the market supply curve as well.
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Indicate whether the statement is true or false
Which of the following statements best describes the study of economics? Economics studies how
A) to organize production so that scarcity does not occur. B) firms make profits. C) we make choices in the face of scarcity. D) to create incentives so that scarcity does not exist. E) businesses reach decisions.