Exhibit 7-12 Marginal revenue and cost per unit curves

As shown in Exhibit 7-12, the firm's short-run supply curve is the:

Question

Exhibit 7-12 Marginal revenue and cost per unit curves

As shown in Exhibit 7-12, the firm's short-run supply curve is the:

Quizplus · Accepted Answer

The firm's short-run supply curve is determined by the portion of the marginal cost curve that lies above the average variable cost curve, which is the rising part of marginal cost beginning at point E in the given diagram. Thus, option B is the correct answer. The entire marginal cost curve (option A) is not correct because it includes the portion where the marginal cost is below the average variable cost, which is not relevant for determining the short-run supply curve. The rising part of the marginal cost beginning at point F (option C) is not correct because it includes the portion of the marginal cost curve where it is still below the average variable cost, i.e., where the firm would not produce any output. The entire marginal revenue curve (option D) is not correct as it is not related to the determination of the short-run supply curve.

Exhibit 7-12 Marginal Revenue and Cost Per Unit Curves