Cost and Supply Curves

Cost and Supply Curves - Chapter 4 Every point along the...

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9/27/11 Chapter 4 Every point along the demand curve is the willingness to pay. Cost and the Supply Curve Cost is the value of what a seller must give up to produce a good Includes cost of all resources used to produce good, including value of the seller’s time Producers have different cost for good A seller will produce and sell the good/service only if the price exceeds his or her cost. Hence, cost is a measure of Willingness to sell supports the supply curve Supply curve: Step structure showing when the producers are willing to supply Producer Surplus (PS) Producer surplus  (PS): the amount a seller is paid for a good minus the  seller’s cost: PS =  – Cost Total PS equals the area above the supply curve under the price, Principles  of Microeconomics  from 0 to Q . o No negative produce surplus the producer just wouldn’t supply it *Demand curve would also be a step curve, if enough variable, we only look at a limited about though
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Cost and Supply Curves - Chapter 4 Every point along the...

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