The correct answer is: A. competition is pure.
Cost curves are supply curves only when there is pure competition. In pure competition, there are many firms in the market, each producing a homogeneous product. Firms are price-takers, meaning that they cannot influence the market price. As a result, firms must produce at the point where marginal cost equals marginal revenue. This is the point where the firm’s supply curve intersects its marginal cost curve.
In monopolistic competition, there are a few firms in the market, each producing a differentiated product. Firms have some control over the price they charge, but they are not able to set prices arbitrarily. As a result, firms must produce at the point where marginal revenue equals marginal cost, but they will not necessarily produce at the minimum point on their average cost curve.
In imperfect competition, there are a few firms in the market, each producing a homogeneous product. Firms have some control over the price they charge, and they are able to set prices above marginal cost. As a result, firms will not necessarily produce at the minimum point on their average cost curve.
In the absence of competition, there is only one firm in the market. This firm is a price-maker, meaning that it can set the price it charges. The firm will produce at the point where marginal revenue equals marginal cost, but it will not necessarily produce at the minimum point on its average cost curve.