Q325
In perfect competition, the firm's _____ above AVC has the identical shape of the firm's supply curve
A.
Marginal revenue curve
B.
Marginal cost curve
AnswerC.
Average cost curve
D.
None of the above
Answer: Option B
Solution
Answer: Option B
Solution:
In perfect competition, the firm's Marginal cost curve above AVC has the identical shape of the firm's supply curve. Under perfect competition average revenue is equal to marginal revenue, so the firm will produce up to that point where marginal revenue and marginal cost are equal. Short run supply curve of a perfectly competitive firm is that portion of marginal cost curve which is above average variable cost curve.