The quantity that a firm will supply in the short run

Question

Quizplus · Accepted Answer

In the short run, a firm's quantity supplied is determined by its marginal cost curve above the average variable cost. This is because in the short run, fixed costs cannot be altered and variable costs make up the majority of a firm's total costs. Therefore, the firm will produce as long as the price it receives is above its average variable cost, where it covers its variable costs and some portion of its fixed costs. The quantity supplied will be determined by the intersection of the marginal cost curve and the price.

The Quantity That a Firm Will Supply in the Short