The short-run supply curve of a firm is ______

the portion of the MC curve below the AVC curve

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the portion of the MC curve below the SAC curve

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the portion of the MC curve above the AVC curve

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the portion of the MC curve above the SAC curve

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Solution

The correct option is C
the portion of the MC curve above the AVC curve

The short-run supply curve is the portion of the MC curve above the AVC curve. Below the AVC curve, the firm shuts down and above the AVC curve, production happens to correspond to MR=P.

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Similar questions

Why is the MC curve U-shaped in the short-run?

Suppose that a firm's total fixed cost is Rs. 100, and the marginal cost schedule of a firm is the following :

$\begin{matrix} Output (in units) & 1 & 2 & 3 & 4 & 5 & 6 & 7 Marginal cost (in Rs) & 10 & 20 & 30 & 40 & 50 & 60 & 70 \end{matrix}$

(i) Is the MC curve U-shaped ?

(ii) Derive the AVC schedule. Will the AVC curve U-shaped ? Discuss.

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