A perfectly competitive firm's short-run supply curve is its marginal cost curve above its intersection with the average variable cost curve.

Question

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In the short run, a perfectly competitive firm will produce at the point where marginal cost (MC) equals the market price. To determine its short-run supply curve, the firm will produce any quantity where price exceeds average variable cost (AVC), because if price is below AVC, the firm should shut down. Therefore, the firm's short-run supply curve is its marginal cost curve above its intersection with the average variable cost curve.

A Perfectly Competitive Firm's Short-Run Supply Curve Is Its Marginal