For a competitive firm, its short run supply curve is ______ and its long run supply curve is _____?
Correct answer: B. SMC above SAVC, LMC above LAC
- A. SMC, LMC
- B. SMC above SAVC, LMC above LAC
- C. SMC below SAVC, LMC above LAC
- D. SMC below SAVC, LMC bellow LAC
Explanation
In the short run, a competitive firm's supply curve is its marginal cost curve above the minimum of average variable cost, because it shuts down below that point. In the long run, supply follows long-run marginal cost above average long-run cost.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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