Imagine constructing a schedule indicating the number of units of a good that
firms offer at each of various pnces. Flgure 4.7 shows the common case of firms facing
increasing marginal costs. Firms offer a total quantity Q2 at price P2. As price increases,
firms offer successively greater quantities, yielding an upward-sloping supply
schedule. The schedule results from the horizontal summation of the marginal cost
curves of the firms. (For example, refer back to MC in Figure 4.5.) Each point on the
supply curve tells us how much it would cost to produce another unit of the good. If
we add up these marginal amounts one unit at a time, beginning with quantity equal
to zero and ending at the quantity supplied, then we arrive at the total cost of producing
that quantity. Graphically, this total cost equals the area under the supply
curve from quantity zero to the quantity supplied.