A firm's short-run supply curve is part of which of the following curves: a

Economics Dec 08, 2020

A firm's short-run supply curve is part of which of the following curves:

a. Marginal revenue,

b. Average variable cost,

c. Average total cost,

d. Marginal cost.

Expert Solution

d. Marginal cost.

A competitive firm's marginal cost (MC) curve cuts the average variable cost (AVC) curve at its absolute bottom. After cutting the average variable cost at its minimum, it turns into the firm's supply curve. In other words, the short-run supply curve of a competitive firm is that segment of its marginal cost curve that lies over and above the average variable cost.

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