navigation bar for Efficiency section
Industry Policy - Efficiency
    A supply curve is also a marginal willingness to sell curve. The curve to the right tells us that if this producer had sold 2 units, she would sell the third for 3. If 5 units had been sold she would only be willing to provide the 6th for a price of 7 and so on. Higher prices are needed to induce her to produce more due to rising opportunity cost.

    In a market economy, producers are typically able to sell all units at the same price so if the market price is 7, 6 units will be supplied, while if the price is 10, 9 units will be supplied.

Copyright © 1995-2004, Inc. - All Rights Reserved