A perfectly competitive firm's short-run supply curve is the segment of the marginal cost curve lying
A) below average fixed cost
B) below average total cost
C) above average variable cost
D) above average total cost

Question

Quizplus · Accepted Answer

In the short run, a perfectly competitive firm's supply curve is the portion of its marginal cost curve that lies above its average variable cost. This is because the firm will only supply output if the price covers the average variable costs, even if it doesn't cover the total costs including fixed costs.

A Perfectly Competitive Firm's Short-Run Supply Curve Is the Segment