The short-run supply curve for a firm in a perfectly competitive market:

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In a perfectly competitive market, firms are price takers and must accept the market price. Therefore, the short-run supply curve is mainly determined by the firm's marginal cost (MC) curve. As long as the market price is above the firm's average variable cost (AVC), it will continue to produce in the short run. So, the firm's short-run supply curve is equivalent to its MC curve above the AVC. The curve will shift if there are changes in variable costs such as labour or material costs, but not fixed costs, since they do not affect the marginal cost. Moreover, the firm's short-run supply curve is likely to slope upward since as the market price increases, the firm would like to produce more to earn more profits.

The Short-Run Supply Curve for a Firm in a Perfectly