What other curve is the same as the market supply curve? Why are the curves the same?
What will be an ideal response?
The market supply curve is the same as the marginal social cost curve. The marginal social cost is the cost of producing one more unit of a good. For any quantity, the market supply curve shows the minimum price for which a producer is willing to produce another unit of the good. (This price is equal to the price on the supply curve that is vertically above each quantity.) A producer is willing to produce a unit of the good if the price covers all costs of the producing that unit, that is, if the price equals the cost of producing the unit. The cost of producing the unit is the marginal social cost. Hence along the market supply curve, the price associated with each quantity is equal to the marginal social cost of each quantity. Therefore the market supply curve is the same as the marginal social cost curve.
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Indicate whether the statement is true or false
Wage differentials are due exclusively to differences in market structure
a. True b. False