Narrbegin Exhibit 7.4 Marginal revenue and cost per unit curves
-As shown in Exhibit 7.4, the short-run supply curve for the firm corresponds to which segment of its marginal cost curve?

Question

Narrbegin Exhibit 7.4 Marginal revenue and cost per unit curves  
-As shown in Exhibit 7.4, the short-run supply curve for the firm corresponds to which segment of its marginal cost curve?

Quizplus · Accepted Answer

The short-run supply curve for a firm corresponds to the portion of its marginal cost curve that lies above its average variable cost curve. This is because a firm will only supply output in the short run if the price (or marginal revenue) covers its average variable cost. Therefore, the correct segment is "B and all points above," as this portion of the marginal cost curve is where the firm would start to supply output in the market.