The short-run supply curve of a competitive firm is the portion of
A) the average variable cost curve that lies above its marginal cost curve.
B) its marginal cost curve that lies above its average variable cost curve.
C) its marginal cost curve that lies above its average total cost curve.
D) its average total cost curve that lies above its marginal cost curve.

Question

Quizplus · Accepted Answer

The short-run supply curve of a competitive firm is the portion of its marginal cost curve that lies above its average variable cost curve. This is because a firm will only supply output in the short run if the price covers its average variable costs, even if it does not cover average total costs.

The Short-Run Supply Curve of a Competitive Firm Is the Portion