Question

Your car still has a marginal cost of $20,000. But, the market price has now increased to $25,000. Your incentive to supply cars is to _____.

just cover your costs

earn a profit

use more productive resources

Answer 1

Earn A Profit.................

Answer 2

The answer is: Earn a profit

Marginal cost refers to additional cost that occurred after supplying one additional product. Market price refers to the price point needed to obtain a certain goods or services.

This means that if supplying the car only cost you $ 20,000. But from that, you could obtain $25,000 from sales. This mean that supplying the car would provide you with incentives in the form of profit for $ 5,000