The short-run supply curve for the firm operating in a perfectly competitive industry is:
A)its marginal cost curve.
B)its marginal cost curve above the minimum of average variable cost.
C)its marginal cost curve above the minimum of average total cost.
D)the average variable cost curve above average revenue curve.

Question

Quizplus · Accepted Answer

In the short run, a perfectly competitive firm will only supply as long as price covers at least average variable cost. Therefore, the short-run supply curve for the firm will be its marginal cost curve above the minimum of average variable cost. This is because the firm will continue to produce as long as price is above this level, but will shut down if price falls below it.

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