In the long run, the competitive firm's supply curve is the ?
Correct answer: C. portion of the marginal cost curve that lies above the average total cost curve
- A. entire marginal cost curve
- B. upward-sloping portion of the average total cost curve
- C. portion of the marginal cost curve that lies above the average total cost curve
- D. upward-sloping portion of the average variable cost curve
- E. portion of the marginal cost curve that lies above the average variable cost curve.
Explanation
In the long run, a competitive firm supplies output along the rising part of its marginal-cost curve only when price covers average total cost. Below that level, the firm cannot cover all costs and exits in the long run.
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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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