[amp_mcq option1=”the rising portion of the marginal cost curve lying above the minimum point of the average variable cost curve” option2=”the falling portion of the marginal cost curve lying before the minimum point of the average variable cost curve” option3=”the rising portion of the marginal cost curve after the highest point of total cost curve” option4=”None of the above” correct=”option1″]<\/p>\n
The correct answer is: A. the rising portion of the marginal cost curve lying above the minimum point of the average variable cost curve.<\/p>\n
A competitive firm is a price-taker, which means that it cannot influence the market price of its product. The firm’s profit-maximizing output level is where marginal revenue equals marginal cost. In the short run, a firm’s marginal cost curve is U-shaped. The minimum point of the marginal cost curve is the point where the firm’s average variable cost curve is at its minimum. Therefore, the supply curve of a competitive firm is the rising portion of the marginal cost curve lying above the minimum point of the average variable cost curve.<\/p>\n
Option B is incorrect because the falling portion of the marginal cost curve lies before the minimum point of the average variable cost curve. This portion of the marginal cost curve is irrelevant for the firm’s profit-maximizing output level.<\/p>\n
Option C is incorrect because the rising portion of the marginal cost curve after the highest point of total cost curve is not relevant for the firm’s profit-maximizing output level. The firm will never produce at an output level where its marginal cost is greater than its average total cost.<\/p>\n
Option D is incorrect because the rising portion of the marginal cost curve lying above the minimum point of the average variable cost curve is the firm’s supply curve in the short run.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”the rising portion of the marginal cost curve lying above the minimum point of the average variable cost curve” option2=”the falling portion of the marginal cost curve lying before the minimum point of the average variable cost curve” option3=”the rising portion of the marginal cost curve after the highest point of total cost curve” … <\/p>\n