Practice mode Costs , Supply And Perfect Competition

In the short run, which part of its cost curves makes up a competitive firm’s supply curve?

Correct answer E. The portion of the marginal cost curve that lies above the average variable cost curve

Explanation

The firm produces where price equals marginal cost, but only if price covers average variable cost. Below minimum AVC it shuts down, so supply is the MC curve above AVC.

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In the short run, which part of its cost curves makes up a competitive firm’s supply curve?

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In the short run, which part of its cost curves makes up a competitive firm’s supply curve?

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