Which of these curves is the competitive firm's short-run supply curve?

Question

Quizplus · Accepted Answer

In the short run, a competitive firm's supply curve is determined by its marginal cost curve above the minimum point of the average variable cost curve. This is because in the short run, the firm can only vary its variable input, and must continue to pay its fixed costs. Therefore, the firm will only produce as long as the price is higher than its variable costs, which are reflected in the marginal cost curve. Specifically, the marginal cost curve intersects the average variable cost curve at its minimum point, which is where the firm will stop production if the price falls below the level of variable costs. Therefore, choice C is the correct answer.

Which of These Curves Is the Competitive Firm's Short-Run Supply