Asked by Mashudu Trinity on Jul 29, 2024
Verified
The short-run supply curve for a firm in a perfectly competitive market is
A) horizontal.
B) likely to slope downward.
C) determined by forces external to the firm.
D) the portion of its marginal cost curve that lies above its average variable cost.
Short-Run Supply Curve
A graphical representation showing the quantity of a good or service that producers are willing and able to sell at different prices over a short period, holding other factors constant.
Marginal Cost Curve
A graphical representation that shows how the cost of producing one more unit of a good changes as the production volume changes.
Average Variable Cost
The total variable costs of production divided by the quantity of output produced, representing the variable cost per unit of output.
- Analyze the relationship between marginal revenue and marginal cost to inform production choices.
- Ascertain the business's immediate supply curve in a market characterized by competition.
Verified Answer
NS
Natty SynorivaJul 29, 2024
Final Answer :
D
Explanation :
In a perfectly competitive market, a firm's short-run supply curve is represented by the portion of its marginal cost curve that lies above its average variable cost curve. This is because the firm will only supply output at a price that covers its average variable costs in the short run.
Learning Objectives
- Analyze the relationship between marginal revenue and marginal cost to inform production choices.
- Ascertain the business's immediate supply curve in a market characterized by competition.