Consider the following short- run cost curves for a perfectly competitive firm. FIGURE 9- 2
-Refer to Figure 9- 2. The short- run supply curve for this perfectly competitive industry is
A) the MC curve at or above a price of $1.50.
B) the entire MC curve.
C) the AVC curve at or above a price of $1.50.
D) the MC curve at or above a price of $3.
E) not determinable from the information provided.

Question

Consider the following short- run cost curves for a perfectly competitive firm.  FIGURE 9- 2
-Refer to Figure 9- 2. The short- run supply curve for this perfectly competitive industry is
A) the MC curve at or above a price of $1.50. 
B) the entire MC curve. 
C) the AVC curve at or above a price of $1.50. 
D) the MC curve at or above a price of $3. 
E) not determinable from the information provided.

Quizplus · Accepted Answer

In a perfectly competitive industry, the short-run supply curve is the portion of the marginal cost (MC) curve that lies above the average variable cost (AVC). The price of $1.50 is likely the shutdown point, where price equals AVC.

Consider the Following Short- Run Cost Curves for a Perfectly