The supply curve is the same as another curve. What other curve is the same as the supply curve? Why are the curves the same?
What will be an ideal response?
The supply curve is the same as the marginal cost curve. The marginal cost is the cost of producing one more unit of a good. For any quantity, the 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 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 cost. Hence along the supply curve, the price associated with each quantity is equal to the marginal cost of each quantity. Therefore the supply curve is the same as the marginal cost curve.
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If absolute property rights to an endangered resource are granted to someone who inefficiently manages the resource, explain what the Coase theorem predicts will happen to that resource
What will be an ideal response?
The welfare costs of rent seeking will approximate _____
a. the value of the resources expended in lobbying b. the deadweight loss of taxation c. the value of the rent-seeking benefits d. zero if political markets are perfectly competitive