Who is the marginal seller
A)the seller who cannot compete with the other sellers in the market
B)the seller who would leave the market first if the price were any lower
C)the seller who can produce at the lowest cost
D)the seller who has the greatest producer surplus

Question

Quizplus · Accepted Answer

The marginal seller is the seller who would leave the market first if the price were any lower. This means that they are selling their product at a price that is just enough to cover their variable costs but not their fixed costs. If the price were to decrease, they would no longer be able to cover their variable costs and would exit the market. Therefore, the marginal seller is the one who sets the market price in the short run. Choice A is incorrect because a seller not being able to compete with other sellers in the market does not necessarily make them the marginal seller. Choice C is incorrect because the seller who can produce at the lowest cost is the most efficient, but not necessarily the marginal seller. Finally, choice D is incorrect because having the greatest producer surplus does not necessarily make a seller the marginal seller.

Who Is the Marginal Seller