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Unformatted text preview: consumer of the last unit of aluminum bought. Similarly, the supply curve reflects the costs of producing aluminum. At any given quantity, the height of the supply curve shows the cost of the marginal seller. In other words, it shows the cost to the producer of the last unit of aluminum sold. In the absence of government intervention, the price adjusts to balance the supply and demand for aluminum. The quantity produced and consumed in the Equilibrium Quantity of Aluminum Price of Aluminum Q MARKET Demand (private value) Supply (private cost) Figure 10-1 T HE M ARKET FOR A LUMINUM . The demand curve reflects the value to buyers, and the supply curve reflects the costs of sellers. The equilibrium quantity, Q MARKET , maximizes the total value to buyers minus the total costs of sellers. In the absence of externalities, therefore, the market equilibrium is efficient....
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This note was uploaded on 07/30/2010 for the course ECON 120 taught by Professor Abijian during the Spring '10 term at Mesa CC.
- Spring '10