Figure 10-5

-Figure 10-5 shows the short-run cost relationships for a perfectly competitive firm.Based on this diagram, which point would not be on the firm's short-run supply curve?

Question

Figure 10-5
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-Figure 10-5 shows the short-run cost relationships for a perfectly competitive firm.Based on this diagram, which point would not be on the firm's short-run supply curve?

Quizplus · Accepted Answer

In a perfectly competitive market, a firm's short-run supply curve is its marginal cost curve above the average variable cost curve. Point B, which is below the average variable cost curve, would not be on the firm's short-run supply curve because the firm would shut down rather than produce at a loss.

Figure 10-5 ​

Figure 10-5