A perfectly competitive firm's short-run supply curve is the part of its marginal cost curve that is:

Question

Quizplus · Accepted Answer

A perfectly competitive firm will produce as long as price is greater than or equal to its average variable cost (AVC) in the short run. This is because in the short run, the firm is unable to change its fixed costs, so it will only continue to produce if it can cover its variable costs. The firm's short-run supply curve is therefore equivalent to its marginal cost curve above its AVC, as producing any output below that level would mean the firm is unable to cover its variable costs.

A Perfectly Competitive Firm's Short-Run Supply Curve Is the Part