The short-run supply curve for a competitive industry is derived by summing the _____ for each firm in the industry.
A)portion of the marginal cost curves above average variable cost
B)upward sloping portion of the average variable cost curve
C)downward sloping portions of the marginal cost curve
D)upward sloping portion of the average total cost curve

Question

Quizplus · Accepted Answer

The short-run supply curve for a competitive industry is derived by summing the portion of the marginal cost curves above average variable cost for each firm in the industry. This is because firms will only supply output when the price covers the average variable cost, and in the short run, firms decide how much to produce by equating marginal cost with price.

The Short-Run Supply Curve for a Competitive Industry Is Derived