An economist says: "The supply curve has two interpretations." What does the economist mean?
What will be an ideal response?
The first interpretation is that the supply curve shows the quantities of a good or service that producers are willing and able to sell at each price, other things being equal. The second interpretation is that the supply curve is a minimum-supply-price curve, so that for each quantity it shows the lowest price at which someone is willing to sell another unit.
You might also like to view...
Which of the following events opened the way for rapid and steady technological changes that underpinned modern economic growth?
A) The Agricultural Revolution B) The Industrial Revolution C) The American Civil War D) Demographic transition in the Western world
Suppose the United States' production possibility frontier was flatter to the widget axis, whereas Germany's was flatter to the butter axis. We now learn that the German mark sharply depreciates against the U.S. dollar. We now know that
A) the United States has no comparative advantage B) Germany has a comparative advantage in butter. C) the United States has a comparative advantage in butter. D) Germany has a comparative advantage in widgets. E) Germany has lost its comparative advantage.