The supply curve for a perfectly competitive industry is the horizontal summation of the individual firms'
A) MC curves above AVC.
B) MC curves above ATC.
C) short- run average cost curves.
D) MC curves above AFC.
E) AVC curves above MC.

Question

Quizplus · Accepted Answer

In a perfectly competitive industry, the supply curve is the horizontal summation of the individual firms' marginal cost (MC) curves above the average variable cost (AVC), as firms will only produce where price covers AVC in the short run.

The Supply Curve for a Perfectly Competitive Industry Is the Horizontal