Is silver actually used for coating copper wire?
Yes. Silver Plating is a commonly used plating material for conductivity. (There is also some debate whether silver helps in preventing tarnish or corrosion compared to bare copper, see this NASA Research PDF). Silver by the pound is more expensive than Copper (~20 dollars for one ounce of silver to ~19 cents for an ounce of copper), but we are talking about plating. A very very thin layer of electro-chemically adhered silver is very cheap in comparison to a single strand of copper wire. Typical plating thickness is just 2µm or greater. The same is done with tin or nickel or gold (Gold being ~1,283 DOLLARS PER OUNCE)

As the Science World advertisement goes:



  Gold is a soft metal that can be easily shaped and stretched. A single ounce of gold can be hammered into a square sheet 30 m on each side or drawn into a wire that would stretch 8 km. Gold leaf can be beaten thin enough to become translucent. Scientists call the ability to be flattened malleability and the ability to be stretched ductility.


1oz into a 30m^2 area (of undetermined thickness). Plating is very cost effective for what you get. (And that's why gold plated audio connectors can be had for pennies. You are only getting a fraction of a fraction of a fraction of gold.)