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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