Just as every consumer has a maximum price at which they are willing to buy, every producer has a minimum acceptable price at which they are willing to sell. At the very least, they want to cover their costs. This minimum price at which an individual producer is willing to sell is known as the seller's cost. Any time that a store advertises that they are "selling at cost," this is what they mean. In this case, they are not making any profit on the sale; they are just breaking even. In terms of production, in economics the lowest acceptable price is typically defined as the price that covers a firm's marginal cost—the additional cost that the firm incurred by producing that one particular unit of output.
The supply schedule, a table that shows the quantity supplied of a good at different prices, shows the different minimum prices at which six coffee shops are willing to sell a cup of coffee.
|Supply Schedule for Coffee|
|Potential Seller||Minimum Price (Seller's Cost)|
|Rise 'N' Shine||$0.50|
|The Brown Bean||$3.50|
|The Koffee Kup||$4.00|