When Factor Supply Is Fixed and Quantity of the Factor

question 91

Multiple Choice

When factor supply is fixed and quantity of the factor is graphed on the horizontal axis while factor price is graphed on the vertical axis, the factor:

• A) supply curve is horizontal.
• B) supply curve is vertical.
• C) supply curve slopes up to the right.
• D) demand curve slopes up to the right.

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Definitions:

Double Marginalization

A scenario in which two or more firms at different stages of a supply chain apply their own markups, leading to inefficiencies and inflated prices for consumers.

Retail Price

The cost at which goods or services are sold to the public, typically higher than the wholesale price to include a markup for profit.

Manufacturer Markup

The difference between the cost to produce a good and its selling price, often added by manufacturers to cover costs and generate profit.

Exclusion of Markup

The practice of not including an additional amount to the cost of goods when pricing them, often to maintain competitive pricing.