The short-run supply curve and short-run marginal cost curve for a perfectly competitive firm coincide when the market price is greater than average variable cost.

Question

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In the short run, a perfectly competitive firm will produce as long as the market price is greater than or equal to its marginal cost. When the market price is greater than average variable cost, the firm is earning enough revenue to cover both its variable and fixed costs, leading to positive profits. At this point, the short-run supply curve and short-run marginal cost curve coincide, as the firm is willing to supply any quantity at that price.

The Short-Run Supply Curve and Short-Run Marginal Cost Curve for a Perfectly