The Basic Difference Between the Market Supply Curve of an Input

question 70

Multiple Choice

The basic difference between the market supply curve of an input and the supply curve of an input to a single perfectly competitive firm is that

• A) demand by a single firm can influence the input supply curve, but market demand cannot influence market supply.
• B) a single competitive firm always faces a backward-bending input supply curve, whereas the market supply curve infrequently bends backward.
• C) the input supply curve for a single firm is perfectly elastic, a condition rarely, if ever, observed in a market supply curve.
• D) the input supply curve for a perfectly competitive firm rises more rapidly than the market supply curve.
• E) There is no difference; the two supply curves are identical.

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Definitions:

Product Z

A hypothetical product used in discussions or examples when no specific product is being referenced.

Consumer's Income

The total amount of income available to an individual or household for spending on goods and services.

Expected-Rate-of-Return Curve

A graphical representation showing the expected returns of an investment as a function of varying degrees of risk.

Interest-Rate Cost-of-Funds Curve

A graphical representation depicting the relationship between the cost of funding for lending institutions and different interest rates.