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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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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