In the context of analyzing economic efficiency, we can interpret the market supply curve to be showing
A) the average cost of producing the product at each output level.
B) the marginal revenue from each extra unit of the product.
C) the average variable cost of producing the product.
D) the marginal opportunity cost to produce each unit of the product.

Question

Quizplus · Accepted Answer

The market supply curve represents the cost of producing each additional unit of a good, which is also known as the marginal opportunity cost. Therefore, option D is the best choice. Option A is incorrect because it refers to average cost rather than marginal cost. Option B is incorrect because it refers to marginal revenue, which is the revenue from each additional unit sold, not the cost of producing each unit. Option C is incorrect because it refers to average variable cost, which does not capture the full cost of production.

In the Context of Analyzing Economic Efficiency, We Can Interpret