Chapter 3 Appendix Outline
A. The Law of Supply and Producer Behavior
1. A supply curve shows the quantities producers plan to sell at all possibleprices.
2. The supply curve also shows the lowest marginal cost of producing each unitof the product.
a. A single point on this curve refers to quantity supplied.
1. Quantity supplied refers to the quantity that producers plan to sell ata particular price.
b. The positive slope of the supply curve reflects the law of supply.
1. The law of supply states that more will be sold only if price increases.
2. The basis of the law is that as additional units of a good areproduced, marginal cost rises.
a. Since it costs more to produce additional units, producers will sell more only if they receive a higher price.

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