Multiple Choice
Suppose a market is divided into two segments: Segment A and Segment B. If Segment A has a higher equilibrium quantity than Segment B, which market segment is larger?
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3. The Market Forces of Supply and Demand
Market Equilibrium
Multiple Choice
In order to derive the market supply curve from individual supply curves, we add up the:
A
quantities supplied by all sellers at each price
B
profits earned by each seller at each price
C
costs of production for each seller
D
prices at which each seller is willing to supply
Verified step by step guidance1
Understand that the market supply curve represents the total quantity of a good that all sellers in the market are willing and able to supply at each possible price.
Recall that individual supply curves show the quantity supplied by a single seller at different prices.
To derive the market supply curve, you need to aggregate the quantities supplied by all individual sellers at each price level, not their profits, costs, or prices.
Mathematically, if \(Q_{s1}(P)\), \(Q_{s2}(P)\), ..., \(Q_{sn}(P)\) represent the quantities supplied by sellers 1 through n at price \(P\), then the market supply \(Q_s(P)\) is given by the horizontal summation:
\[Q_s(P) = Q_{s1}(P) + Q_{s2}(P) + \cdots + Q_{sn}(P)\]
This means for each price \(P\), you add up all the quantities supplied by each seller to get the total market quantity supplied at that price.
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