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The short-run supply curve of a perfectly competitive firm: a
The short-run supply curve of a perfectly competitive firm:
a. Intersects the minimum point of both its short-run average variable cost and its short-run average total cost curves,
b. Intersects the minimum point of its short-run average variable cost curve but not its short-run average total cost curve,
c. Intersects the minimum point of its short-run average total cost curve and may or may not intersect the minimum point of its short-run average variable cost curve,
d. Intersects the minimum point of its short-run average total cost curve but not its short-run average variable cost curve.
Expert Solution
- The short-run supply curve of a perfectly competitive firm a. Intersects the minimum point of both its short-run average variable cost and its short-run average total cost curves
For a perfectly competitive firm in the short-run, the marginal cost curve is the same as the short-run supply curve. The average variable cost and average total cost curves usually have a U shape. The marginal cost curve intersects the short-run average variable cost curve and the short-run average total cost curve at their respective minimum points. Hence, it can be inferred that the short-run supply curve also intersects these curves at their minimum points.
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