Question

How do you derive a market supply curve from individual supply curves?

1) Add up quantities supplied by all individual producers for each price
2) Calculate the average quantity supplied among all producers
3) Use the largest quantity supplied among all producers for each price
4) Add up prices paid for each unit supplied by producers

Answer 1

To derive a market supply curve, you add up the quantities supplied by each producer at each price level. This creates the total market quantity supplied at various prices, which can be graphed as the market supply curve.

Step-by-step explanation:

To derive a market supply curve from individual supply curves, the correct approach is to add up quantities supplied by all individual producers for each price. This is because a market supply curve is a horizontal summation of all the individual supply curves. Essentially, for each possible price level, you combine the quantities provided by all firms at that price. This aggregation process will give you the total quantity that would be supplied in the market at each price point.

The other options listed, such as calculating the average quantity supplied or using the largest quantity supplied, would not result in an accurate market supply curve. Adding up prices paid does not create a supply curve either, as the supply curve is about quantities that producers are willing to supply at different prices, not prices themselves. To visualize this process, one can draw a graph with the aggregate quantities at each price level which will illustrate the market supply curve.

Answer 2

To derive a market supply curve, add up quantities supplied by all individual producers at each price level and plot these totals against the prices to form the market supply curve. correct option is A

Step-by-step explanation:

To derive a market supply curve from individual supply curves, you follow a specific process. The correct method is to add up the quantities supplied by all individual producers for each price level. Here's how you can visualize this process:

• For each price level in the market, look at every individual producer's supply curve to see how much they are willing to supply at that price.
• Add all these quantities together to get the total quantity supplied at that price across the market.
• Plot these total quantities against their corresponding prices on a graph to trace out the market supply curve.

It is important to note that this aggregation takes into account the individual quantities offered by all producers at various price points, not the average quantity or the highest quantity supplied by an individual firm.