The reason the firm's supply curve slopes upward is because its
A)total cost curve slopes upward.
B)market supply curve slopes upward.
C)total revenue curve slopes upward.
D)marginal cost curve slopes upward.
E)marginal product curve slopes upward.

Question

Quizplus · Accepted Answer

The firm's supply curve is determined by its marginal cost curve. As production increases, the marginal cost of producing each additional unit increases due to the law of diminishing returns. Therefore, the firm must receive a higher price for each unit in order to cover the increasing marginal cost and earn a profit. As a result, the supply curve slopes upward.

The Reason the Firm's Supply Curve Slopes Upward Is Because