[amp_mcq option1=”Is equal to that portion of the short-run marginal cost curve that is above the average variable cost curve” option2=”Is equal to that portion of the short-run marginal cost curve that is above the average total cost curve” option3=”Is equal to that portion of the short-run average total cost curve that is above the average variable cost curve” option4=”None of the above” correct=”option1″]<\/p>\n
The correct answer is: A. Is equal to that portion of the short-run marginal cost curve that is above the average variable cost curve.<\/p>\n
A perfectly competitive firm will produce at the point where marginal revenue equals marginal cost. In the short run, the marginal cost curve will eventually rise above the average variable cost curve. This is because the firm will have to incur fixed costs even if it produces nothing. Therefore, the firm will only produce if the price is above the average variable cost. The portion of the marginal cost curve that is above the average variable cost curve is the firm’s short-run supply curve.<\/p>\n
Option B is incorrect because the short-run supply curve is not equal to the portion of the short-run marginal cost curve that is above the average total cost curve. The average total cost curve includes fixed costs, which the firm must pay even if it produces nothing. Therefore, the firm will only produce if the price is above the average total cost. However, the short-run supply curve is only equal to the portion of the marginal cost curve that is above the average variable cost curve.<\/p>\n
Option C is incorrect because the short-run supply curve is not equal to the portion of the short-run average total cost curve that is above the average variable cost curve. The average total cost curve includes fixed costs, which the firm must pay even if it produces nothing. Therefore, the firm will only produce if the price is above the average total cost. However, the short-run supply curve is only equal to the portion of the marginal cost curve that is above the average variable cost curve.<\/p>\n
Option D is incorrect because the short-run supply curve is not equal to none of the above. The short-run supply curve is equal to that portion of the short-run marginal cost curve that is above the average variable cost curve.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”Is equal to that portion of the short-run marginal cost curve that is above the average variable cost curve” option2=”Is equal to that portion of the short-run marginal cost curve that is above the average total cost curve” option3=”Is equal to that portion of the short-run average total cost curve that is above the … <\/p>\n