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The short-run supply curve is the A
The short-run supply curve is the
A. marginal cost curve above the break-even price.
B. average variable cost curve above the shut-down price.
C. marginal cost curve above the shut-down price.
D. average variable cost curve above the break-even price.
Expert Solution
Both supply and marginal cost curve at quantity vs price/revenue curves.
The Marginal cost curve is the J-shaped curve. It cuts the Average Variable Cost Curve at its lowest point. At this point, the firm is successful in paying the factor costs but does not cover the fixed cost. However, at this point, the firm continues to manufacture as the firm will assume that it will still be able to cover the fixed cost in the longer run. Below this point, the firm will not choose to supply. Hence, the supply curve in the short run is the marginal cost curve above the shut-down price.
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