The supply curve of the firm in perfect competition is that portion of the marginal cost curve above the average variable cost curve.

Question

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In perfect competition, a firm is a price taker, and its supply curve is determined by its marginal cost curve. The portion of the marginal cost curve that lies above the average variable cost curve represents the level of output at which the firm covers its variable costs and makes a positive contribution to fix costs, and hence is willing to produce. Therefore, this portion of the MC curve is the supply curve of the firm in perfect competition.

The Supply Curve of the Firm in Perfect Competition Is