In the price range above minimum average variable cost,a perfectly competitive firm's supply curve is

Question

Quizplus · Accepted Answer

In a perfectly competitive market, a firm's supply curve is determined by its marginal cost curve above minimum average variable cost. Therefore, the supply curve in the price range above minimum average variable cost will be the same as its marginal cost curve. Choice A is incorrect because the supply curve is not necessarily horizontal at the market price, as it depends on the shape of the marginal cost curve. Choice B is incorrect because the firm would not produce zero output if the price is above minimum average variable cost. Choices D and E are incorrect because the supply curve is not the same as the average variable cost or total variable cost curve in a perfectly competitive market.

In the Price Range Above Minimum Average Variable Cost,a Perfectly