A perfectly competitive firm's short-run supply curve is: A. its marginal cost curve above the AVC...

A perfectly competitive firm's short-run supply curve is:

A. its marginal cost curve above the AVC curve
B. its marginal cost curve below the marginal revenue curve
C. horizontal at the market price
D. its total cost curve above the AVC
E. its marginal revenue curve below the ATC curve

Solutions

Expert Solution

Option A

A. its marginal cost curve above the AVC curve

A supply curve of a firm is marginal cost curve above the minimum AVC because a firm produces output at the MC and it maximizes profit or minimizes losses so it starts selling when the price is above minimum AVC so the firm will cover all the varible costs and some of the fixed costs to minimize profit.

Rahul Sunny answered 1 year ago

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