The approach based on the relationship between price and marginal cost brings about the same supply curve as what is implied by the approach based on profit maximization.

Question

Quizplus · Accepted Answer

The relationship between price and marginal cost is a key consideration in profit maximization, as firms seek to produce the quantity where marginal cost equals price in order to maximize profits. Therefore, the supply curve derived from this approach should be the same as the supply curve derived from the profit maximization approach.

The Approach Based on the Relationship Between Price and Marginal