Which portion of the marginal cost curve is used to create a firm's short-run supply curve?
A) the entire marginal cost curve
B) the marginal cost curve above its intersection with the average variable cost curve because below this price, firms will shut down in the short run
C) the marginal cost curve above its intersection with the marginal revenue (demand) curve
D) the marginal cost curve above its intersection with the average total cost curve because below this price, firms will shut down in the short run

Question

Quizplus · Accepted Answer

The firm's short-run supply curve is the portion of the marginal cost curve that lies above the average variable cost curve, as firms will not produce if the price falls below this level.

Which Portion of the Marginal Cost Curve Is Used to Create