The competitive firm's short-run supply curve is that portion of the marginal-cost curve that lies above which average cost

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The competitive firm's short-run supply curve is that portion of the marginal-cost curve that lies above the average variable cost. This is because, in the short run, a firm must cover its variable costs in order to stay in business. Thus, the firm will only supply output if the price is greater than or equal to its average variable cost, which is represented by the point where the marginal cost curve intersects the average variable cost curve. Any price below this point would cause the firm to shut down in the short run. Therefore, the portion of the marginal cost curve that lies above the average variable cost curve represents the firm's short-run supply curve.

The Competitive Firm's Short-Run Supply Curve Is That Portion of the Marginal-Cost