In the world oil market, oil is supplied up to the point where

Question

Quizplus · Accepted Answer

In a perfectly competitive market, producers will supply oil up to the point where the marginal cost of producing the last barrel is just equal to the price buyers are willing to pay for that last barrel. This is because if the marginal cost is higher than the price, it is not profitable to produce that additional unit. And if the price is higher than the marginal cost, producers will continue to produce until the marginal cost equals the price, maximizing their profits.

In the World Oil Market, Oil Is Supplied Up to the Point