A firm's short-run supply curve is its marginal cost curve.

Question

Quizplus · Accepted Answer

In the short run, a firm's supply is determined by its marginal cost curve. This is because in the short run, firms have limited ability to adjust their production capacity, so they must rely on their existing capacity to determine how much to produce. And in the short run, the cost of producing one additional unit of output is given by the firm's marginal cost curve. Therefore, the firm's short-run supply curve is its marginal cost curve.

A Firm's Short-Run Supply Curve Is Its Marginal Cost Curve