Asked by Chris Mortell on May 23, 2024
Verified
In pure competition, a competitive firm's supply curve is that section of its marginal cost curve above ATC, and at any price below the average cost, the firm will produce nothing.
Marginal Cost Curve
A graphical representation showing how the cost to produce one additional unit of a good changes as production increases.
Average Total Cost (ATC)
The total cost of production (fixed and variable costs) divided by the total quantity of output produced.
- Interpret supply curves in the context of pure competition.
Verified Answer
IC
IGBOJEKWE CHINOMNSOMay 27, 2024
Final Answer :
False
Explanation :
In pure competition, a competitive firm's supply curve is that section of its marginal cost curve above AVC (average variable cost), not ATC (average total cost). At any price below AVC, the firm will produce nothing, because it cannot cover its variable costs.
Learning Objectives
- Interpret supply curves in the context of pure competition.