In the short run, the competitive firm's supply curve is the portion of the marginal cost curve that lies above the average variable cost curve?
Correct answer: E. portion of the marginal-cost curve that lies above the average variable cost curve
- A. Upward-sloping portion of the average total cost curve
- B. upward-sloping portion of the average variable cost curve
- C. portion of the marginal cost curve that lies above the average total cost curve.
- D. entire marginal cost curve.
- E. portion of the marginal-cost curve that lies above the average variable cost curve
Explanation
A competitive firm supplies output where price covers marginal cost, but only while price is at least average variable cost. Therefore, its short-run supply curve is the marginal-cost curve above the AVC curve.
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