a. Explain why a firm's (rising) marginal cost (MC) curve is its supply curve. Suppose foreign firms' MC of producing a given quantity of steel is always half of an American firm's MC of producing that quantity, and both American and foreign firms are in fact both producing steel. (For simplificity, lump all foreign firms together as one firm, and all Ameri- can firms as the other, and assume both MC curves start at the origin and increase linearly as output increases.)

b. How can it be that both American and foreign firms would both produce steel?