Which of these curves is the competitive firm's supply curve

Question

Quizplus · Accepted Answer

The competitive firm's supply curve is the portion of the marginal cost curve that is above the average variable cost curve, because the firm will only produce if it can cover its variable costs. Option A is incorrect because the firm will still produce if the price is above the average variable cost but below the average total cost. Option B is incorrect because the firm will still produce if the price is above the average total cost, but below the average fixed cost. Option D is incorrect because the average fixed cost does not vary with the level of output or price.

Which of These Curves Is the Competitive Firm's Supply Curve