Short-run supply curves for perfectly competitive firms tend to be upward sloping because:

Question

Quizplus · Accepted Answer

The short-run supply curve for a perfectly competitive firm is upward-sloping due to both the law of diminishing marginal returns (which leads to increasing marginal costs) and the fact that fixed costs do not vary with output in the short run. Therefore, both options A and B are correct. Option C, which suggests that marginal fixed costs are zero, is not necessarily true and is not a reason for the upward slope of the supply curve in the short run.

Short-Run Supply Curves for Perfectly Competitive Firms Tend to Be