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A supply curve does all the following, except A
A supply curve does all the following, except
A. uses the Ceteris Paribus assumption.
B. holds constant time, place, income, cost of inputs, cost of substitutes, and suppliers' expectations about future prices.
C. shows quantity producers are willing and able to supply at each price.
D. shows consumers' marginal benefit for each unit produced.
E. shows suppliers' marginal cost of each unit produced.
Expert Solution
The answer is D.
The supply curve does not indicate the marginal benefit for each unit produced. Instead, the marginal benefit for each unit produced is indicated in the demand curve. Since consumers will purchase a good only if the marginal benefit is higher than the cost, which is the price of the good. At any given quantity, the corresponding price therefore reveals the marginal benefits consumers expect to receive from purchasing the last unit of the good.
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