Market Supply : The horizontal summation of all the individual firm supply curves. A market supply curve shows what quantity will be supplied by all firms at various prices. or service. The impact of a surplus in a market is to drive prices down and to increase the quantity traded.

The Supply Curve of a Firm
The supply curve of a firm is a graphical representation of the quantity of goods or services that a firm is willing and able to supply at various prices. It depicts the relationship between the price of a product and the quantity of that product that a firm is willing to produce and sell in a given time period.
Key Points:
- The supply curve slopes upward from left to right, indicating a positive relationship between price and quantity supplied.
- The quantity supplied is shown on the horizontal axis, while the price is shown on the vertical axis.
- The supply curve is usually depicted as a straight line or an upward-sloping curve.
- The shape of the supply curve can vary depending on factors such as production costs, technology, and government regulations.
- The supply curve shows the firm's response to changes in price, assuming that all other factors remain constant.
- When the price of a product increases, the firm has an incentive to increase its production and supply more of the product.
- Conversely, when the price decreases, the firm may reduce its production and supply less of the product.
Overall, the supply curve of a firm provides valuable information about the quantity of goods or services that a firm is willing and able to supply at different price levels. It helps in understanding the behavior of firms in response to changes in market conditions and assists in analyzing market equilibrium and the determination of prices.

The elasticity of supply measures:
The degree of responsiveness of quantity supplied at a particular price. This means that it measures how sensitive the quantity supplied is to changes in price. It is important in determining how producers will react to changes in market conditions and price fluctuations.
Key Points:
- Elasticity of supply is a measure of how much the quantity supplied changes in response to a change in price.
- It indicates the flexibility of producers to adjust their output levels in response to changes in price.
- The elasticity of supply can be influenced by various factors such as production costs, availability of inputs, and the time period under consideration.
- A high elasticity of supply means that producers can easily increase or decrease their output in response to price changes, indicating a more flexible supply curve.
- On the other hand, a low elasticity of supply suggests that producers have limited ability to adjust their output levels, resulting in a less flexible supply curve.
- The elasticity of supply is typically positive, as an increase in price usually leads to an increase in quantity supplied, and vice versa.
- However, the extent of the increase or decrease in quantity supplied will depend on the magnitude of the elasticity coefficient.
- Elasticity of supply is an important concept in economics as it helps to understand the responsiveness of producers to changes in market conditions and price signals.
- It is also crucial in determining the incidence of taxes or subsidies on producers and the overall market equilibrium.

Supply Schedule Definition:
A supply schedule is a tabular representation that shows the quantity of a good or service that suppliers are willing and able to produce and sell at various prices.
Explanation:
The supply schedule is used to illustrate the relationship between price and quantity supplied in the market. It provides valuable information about the behavior of suppliers and their response to changes in price.
Key Points:
- The supply schedule is presented in a table format.
- It lists different prices in one column and the corresponding quantity supplied in another column.
- The quantity supplied represents the amount of a product that producers are willing to sell at a particular price.
- The supply schedule helps to identify the law of supply, which states that as the price of a product increases, the quantity supplied also increases, ceteris paribus.
- It allows for the analysis of market equilibrium, where the quantity supplied equals the quantity demanded.
- The supply schedule can be used to create a graphical representation known as the supply curve, which shows the relationship between price and quantity supplied in a visual format.
Conclusion:
A supply schedule is a tabular representation that provides information about the quantity supplied at different prices. It is an essential tool in understanding the behavior of suppliers and analyzing market dynamics.

Marginal revenue is the increase in revenue that results from the sale of one additional unit of output. Marginal revenue helps a company identify the revenue generated from one additional unit of production. A company that is looking to maximize its profits will produce up to the point where marginal cost equals marginal revenue.

TFC curve is a horizontal straight line parallel to X-axis showing that total fixed costs remain same at all levels of output. 

Variable costs vary with output because:
- Expenditure on variable factors: Variable costs are the expenses that change with the level of output. They include costs such as direct labor, raw materials, and utilities. These costs vary because they are directly related to the quantity of input used in the production process. As the output increases, more variable factors are required, leading to an increase in variable costs.
- Short-run flexibility: Variable costs can be adjusted in the short run to accommodate changes in output. For example, a company may hire more workers or purchase additional raw materials to meet increased demand. Conversely, if demand decreases, the company can reduce its variable costs by scaling back on labor or raw material purchases. This flexibility allows businesses to adapt to changing market conditions.
- Cost behavior patterns: Variable costs exhibit a linear relationship with output. This means that as output increases, variable costs also increase proportionally. For example, if a company produces 100 units of a product and incurs $100 in variable costs, producing 200 units would result in $200 in variable costs. This pattern of cost behavior is in contrast to fixed costs, which remain constant regardless of output.
- Long-run adjustments: While variable costs may vary in the short run, they may not necessarily remain constant in the long run. In the long run, businesses have more flexibility to adjust their production processes and make changes to their fixed costs. These adjustments can lead to changes in the composition of variable costs. For example, a company may invest in new technology or equipment that reduces the amount of labor required, resulting in a decrease in variable labor costs.
In summary, variable costs vary with output because they are directly related to the quantity of input used in the production process and can be adjusted in the short run to accommodate changes in output. These costs exhibit a linear relationship with output and can also be influenced by long-run adjustments to production processes.

The opportunity cost incurred per unit of good produced. This is calculated by dividing the cost of production by the quantity of output produced.
Average cost is a general notion of the per unit cost incurred in the production of a good or service. It is specified as the total cost divided by the quantity of output.

Explanation:
The relationship between AVC (Average Variable Cost), AFC (Average Fixed Cost), and ATC (Average Total Cost) can be understood by breaking down each term:
1. AVC (Average Variable Cost):
- Represents the cost per unit of variable inputs (e.g., labor, raw materials) required to produce a given quantity of output.
- Calculated by dividing total variable cost by the quantity of output produced.
- AVC = Total Variable Cost / Quantity of Output
2. AFC (Average Fixed Cost):
- Represents the cost per unit of fixed inputs (e.g., rent, machinery) required to produce a given quantity of output.
- Calculated by dividing total fixed cost by the quantity of output produced.
- AFC = Total Fixed Cost / Quantity of Output
3. ATC (Average Total Cost):
- Represents the total cost per unit of output, including both fixed and variable costs.
- Calculated by dividing total cost by the quantity of output produced.
- ATC = Total Cost / Quantity of Output
Now, let's understand the relationship between these terms:
- AVC + AFC = ATC
- This means that the average variable cost (AVC) and average fixed cost (AFC) together make up the average total cost (ATC).
- The AVC represents the variable portion of the cost, while the AFC represents the fixed portion.
- When these costs are combined, we get the total cost per unit of output, which is the ATC.
Therefore, the correct option is B: AVC + AFC = ATC.

Relationship between TFC, TVC, and TC. Total fixed cost (TFC) is represented by a straight line parallel to X-axis and it remains unchanged for all output levels in a time period. ... TC is the sum of TFC and TVC. When no variable output is added, TC is equal to TFC.