Exhibit 7-17 Marginal revenue and cost per unit curves

As shown in Exhibit 7-17, the short-run supply curve for the firm corresponds to which segment of its marginal cost curve?

Question

Exhibit 7-17 Marginal revenue and cost per unit curves

As shown in Exhibit 7-17, the short-run supply curve for the firm corresponds to which segment of its marginal cost curve?

Quizplus · Accepted Answer

The short-run supply curve for the firm corresponds to the segment of the marginal cost curve where marginal cost is equal to or greater than marginal revenue. In this case, that corresponds to segment B and all points above it. The firm will only supply output at prices that cover at least the variable cost of production, which is reflected in the marginal cost curve.

Exhibit 7-17 Marginal Revenue and Cost Per Unit Curves