For any competitive market, the supply curve is closely related to the:

• A. market demand curve
• B. average revenue of firms
• C. marginal cost of production
• D. total utility of consumers

Answer: (C)

Verified step by step guidance

1. Understand that in a competitive market, firms are price takers, meaning they accept the market price as given and decide how much to produce based on that price.
2. Recall that the supply curve shows the quantity of a good that firms are willing to supply at different prices.
3. Recognize that a firm's supply decision is based on comparing the market price to its marginal cost (MC) of production, which is the cost of producing one additional unit of output.
4. Note that the marginal cost curve above the average variable cost represents the firm's supply curve because firms will produce where price equals marginal cost to maximize profit.
5. Therefore, the market supply curve is derived from the marginal cost curves of all firms in the market, making the marginal cost of production the key relationship to the supply curve.