In pure competition, a competitive firm's supply curve is that section of its marginal cost curve above ATC, and at any price below the average cost, the firm will produce nothing.

Question

Quizplus · Accepted Answer

In pure competition, a competitive firm's supply curve is that section of its marginal cost curve above AVC (average variable cost), not ATC (average total cost). At any price below AVC, the firm will produce nothing, because it cannot cover its variable costs.

In Pure Competition, a Competitive Firm's Supply Curve Is That