Asked by Julia Ibanez on May 03, 2024
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Three hundred firms supply the market for paint. For fifty of the firms, their short-run average variable costs are minimized at $10 and short-run total costs are minimized at $15. For the remaining firms, the short-run average variable costs and short-run average total costs are minimized at $20 and $25, respectively. If each firm has a U-shaped marginal cost curve then the short-run market supply curve is:
A) U-shaped too.
B) kinked at $10.
C) kinked at $15.
D) kinked at $20.
E) kinked at $25.
Marginal Cost Curve
A graph that shows the change in the cost of producing one additional unit of a good or service, typically sloping upwards as output increases.
Market Supply Curve
A graphical representation showing the relationship between the price of a good and the total output of the industry at that price.
Average Variable Costs
The cost that varies with the level of output, divided by the quantity of output produced, reflecting the variable expenses per unit.
- Grasp the linkage between marginal cost, average variable cost, fixed costs, and what it means for short-run supply curves.
Verified Answer
Learning Objectives
- Grasp the linkage between marginal cost, average variable cost, fixed costs, and what it means for short-run supply curves.
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