Market supply for a private good is found by
A) vertically summing all market prices for a given quantity
B) horizontally summing the quantity decisions of producers at each and every price
C) adding the price-quantity pairs for all units sold
D) none of the above

Question

Quizplus · Accepted Answer

To find the market supply for a private good, we need to horizontally sum the quantity decisions of all producers at each and every price. This will give us the total quantity supplied at each price, which we can then use to create a supply curve for the market. Vertically summing all market prices for a given quantity (A) would give us the total revenue earned by producers, not the quantity supplied. Adding the price-quantity pairs for all units sold (C) would give us the total revenue earned and the total quantity sold, but this does not necessarily give us the supply curve. Therefore, the correct answer is (B).

Market Supply for a Private Good Is Found by