The short-run supply curve for a perfectly competitive firm is the ____ cost curve above the _____ price.

Question

Quizplus · Accepted Answer

In the short-run, a perfectly competitive firm will produce at the point where marginal cost equals marginal revenue. Therefore, the short-run supply curve for a perfectly competitive firm is the portion of the marginal cost curve that lies above the minimum average variable cost point (i.e., shut-down price), as the firm will shut down if the price falls below this point. Thus, the correct choice is D, where the short-run supply curve is the marginal cost curve above the shut-down price.

The Short-Run Supply Curve for a Perfectly Competitive Firm Is