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Question
A competitive firms MC curve and AVC curve are given. Show which region of the curves show the firm's supply curve in the short run?
A competitive firms MC curve and AVC curve are given. Show which region of the curves show the firm's supply curve in the short run?
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Solution
The correct option is C Region EF
The short run supply
curve of firm in a perfectly competitive market is the portion of marginal cost
curve above average variable cost curve which means that supply under perfectly
competitive market is the excess of marginal cost over average variable
cost. Therefore, the required region is EF.
The short run supply curve of firm in a perfectly competitive market is the portion of marginal cost curve above average variable cost curve which means that supply under perfectly competitive market is the excess of marginal cost over average variable cost. Therefore, the required region is EF.
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