The Marginal Cost Curve Is a Price Taker's Supply Curve

question 50

Multiple Choice

The marginal cost curve is a price taker's supply curve because it shows

• A) an inverse relationship between price and output.
• B) the amount of profit at each level of output.
• C) the extra profit at each level of output.
• D) a negative relationship between price and output.
• E) that a profit-maximizing firm will produce more as price rises.

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Definitions:

Marginal Cost

The escalation in cumulative costs incurred from creating an additional unit of a good or service.

Competitive Supply Curve

A graphical representation showing the quantities of a good or service that a firm is willing to supply at different prices in a competitive market.

Dominant Firm

A firm that has a large share of the total sales in a particular market, giving it significant control over the market.

Copper Cartel

An agreement among copper-producing countries or companies to control copper prices and production, often to maintain high prices.