Individual and Market Supply Curves: Understanding the Differences and Deriving the Market Curve

The video tutorial explains the difference between individual firm supply curves and market supply curves. It illustrates how individual firms decide on the quantity of a product to supply at various prices and how these individual supplies aggregate to form the market supply curve. Examples of firms A and B are used to demonstrate supply behavior and capacity limits. The tutorial also covers graphing these supply curves and concludes with a recap of the key concepts.

What is the primary difference between an individual firm supply curve and a market supply curve?

• An individual firm supply curve is horizontal, while a market supply curve is vertical.

• An individual firm supply curve is based on demand, while a market supply curve is based on supply.

• An individual firm supply curve is always upward sloping, while a market supply curve is downward sloping.

• An individual firm supply curve represents the supply of one firm, while a market supply curve represents the total supply of all firms in the market.

How does a firm typically respond to an increase in the price of its product?

• It keeps the quantity supplied constant.

• It stops supplying the product.

• It increases the quantity supplied.

• It decreases the quantity supplied.

What happens to Firm B's supply when the price exceeds £9000?

• Firm B increases its supply.

• Firm B maintains its supply at 20,000 units.

• Firm B stops supplying altogether.

• Firm B decreases its supply.

How is the market supply curve derived?

• By taking the minimum supply of all firms.

• By taking the maximum supply of all firms.

• By adding up the individual supply curves of all firms.

• By averaging the supply curves of all firms.

Which firm supplies the most units at a price of £3000?

• Firm D

• Firm C

• Firm B

• Firm A

What is the market supply at a price of £3000 when there are four firms in the market?

• 100,000 units

• 25,000 units

• 75,000 units

• 50,000 units

Why is understanding the market supply curve important for economists?

• It is used to set government policies.

• It determines the demand for products.

• It provides insights into the total supply available in the market.

• It helps in predicting individual firm behavior.