Question

Why is the short-run supply curve for a perfectly competitive firm not equivalent to the entire...

Why is the short-run supply curve for a perfectly competitive firm not equivalent to the entire marginal cost curve?

a. Because prices below the minimum variable cost curve cause the firm to shut down.

b. Because prices above the minimum variable cost curve cause the firm to shut down.

c. Because prices equal to the marginal cost curve cause the firm to shut down.

d. Because prices below the marginal cost curve cause the firm to shut down.

Homework Answers

Answer #1

Ans. a) Because prices below the minimum variable cost curve cause the firm to shut down.

The short-run supply curve of a perfectly competitive firm is the part of the marginal cost curve that is equal or above the minimum point of the average variable costs curve because of the minimum point of the average variable cost curve represents the shutdown point and if price falls below this level, the firm will not able to cover variable costs of the production along with fixed costs. Therefore, it will not continue to produce.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. For a perfectly competitive firm in the short run, the ____________ price is at minimum...
1. For a perfectly competitive firm in the short run, the ____________ price is at minimum average variable cost and the break-even price is at minimum ________ cost.    a. Shut-down: Marginal b. Shut-down: Average c. Operating: Average d. Operating: Marginal 2. The short-run supply curve for a perfectly competitive firm is a _______ line at zero quantity if the price is below minimum average variable cost but is the marginal cost if the price is at or above minimum...
1) A perfectly competitive firm's short-run supply curve is its: A. average variable cost curve above...
1) A perfectly competitive firm's short-run supply curve is its: A. average variable cost curve above the marginal cost curve. B. marginal cost curve above the average fixed cost curve. C. marginal cost curve above the average total cost curve. D. marginal cost curve above the average variable cost curve. 2)Economic Profit A. (per unit) is price minus average variable cost. B. is correctly described by all of these. C. as a total amount, is (P - ATC) times quantity....
A. In the competitive model, the short-run supply curve of a firm is its marginal cost...
A. In the competitive model, the short-run supply curve of a firm is its marginal cost curve (above minimum average variable cost) and the market supply curve is the horizontal summation of those marginal cost curves across all firms. Since marginal cost curves are upward-sloping, short-run supply curves must also be upward-sloping. Why – what is it that causes marginal cost curves to be upward-sloping in the short-run? (6)
2. Consider a perfectly competitive firm with total costs ?? = ? + ?? + ??2...
2. Consider a perfectly competitive firm with total costs ?? = ? + ?? + ??2 a) Identify the fixed cost ??, and the variable cost of this firm, ??(?). (Each of them is just a part of the total cost.) b) Find the average cost ??(?), and the marginal cost ??(?). c) Long-run supply. Find the minimum of the ??(?) curve, which constitutes the “shutdown price” in a long-run setting. Use this “shut-down price” to describe the firm’s long-run...
a) In the long run in a competitive constant-cost industry A. A firm’s supply curve is...
a) In the long run in a competitive constant-cost industry A. A firm’s supply curve is upward sloping but the industry supply curve is perfectly elastic at the minimum of AVC. B. firm’s supply curve is upward sloping but the industry supply curve is perfectly elastic at the minimum of ATC. C. Both the industry and a firm’s supply curve are perfectly elastic at the minimum of ATC. 2)Which of the following is correct? A. In a competitive market buyers...
A perfectly competitive firm will continue to operate in the short run when the market price...
A perfectly competitive firm will continue to operate in the short run when the market price is below its average total cost if the A. price is also less than the minimum average variable cost. B. total fixed costs are less than total revenue. C. marginal revenue is greater than marginal cost. D. marginal cost is minimized. E. price is at least equal to the minimum average variable cost.
Short run cost curves: a. Explain why the marginal cost curve intersects the average total and...
Short run cost curves: a. Explain why the marginal cost curve intersects the average total and variable cost curve at their respective minimum values: b. At what point on the ATC will a perfectly competitive firm always produce in the long run: c. The supply curve for a perfectly competitive firm is the same as one of the cost curves based on a specific criterion. State both the curve and the criterion:
In class we looked at (short run) cost curves. Explain why the marginal cost curve intersects...
In class we looked at (short run) cost curves. Explain why the marginal cost curve intersects the average total and variable cost curves at their respective minimum values: At what point on the ATC will a perfectly competitive firm always produce in the long run: The supply curve for a perfectly competitive firm is the same as one of the cost curves based on a specific criterion. State both the curve and the criterion:
32.   The relationship that indicates that the perfectly competitive firm in long-run equilibrium is economically efficient...
32.   The relationship that indicates that the perfectly competitive firm in long-run equilibrium is economically efficient is that A.   long-run marginal cost equals long-run average cost at long-run average cost’s lowest value. B.   the typical firm earns neither economic profits nor economic losses. C.   marginal benefit equals long-run marginal cost. D.   demand equals marginal revenue equals average revenue equals price. 33.   The perfectly competitive lobster market is in long-run equilibrium. Following an increase in demand we would expect the typical...
A perfectly competitive firm will shut down in the short run when a. ATC > P...
A perfectly competitive firm will shut down in the short run when a. ATC > P > AVC. b. AVC > P > ATC. c. AVC > P. d. ATC > P.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT