Above the shutdown point, a competitive firm's supply curve coincides with its:
A) marginal revenue curve.
B) marginal cost curve.
C) average variable cost curve.
D) average total cost curve.

Question

Above the shutdown point, a competitive firm's supply curve coincides with its:
A) marginal revenue curve.
B) ​marginal cost curve.
C) ​average variable cost curve.
D) ​average total cost curve.

Quizplus · Accepted Answer

Above the shutdown point, a firm will continue to produce as long as it can cover its variable costs, which are represented by the marginal cost curve. Therefore, the supply curve of a competitive firm above the shutdown point will coincide with its marginal cost curve.

Above the Shutdown Point, a Competitive Firm's Supply Curve Coincides