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Assume for a competitive firm that MC = AVC at $12, MC = ATC at $20,...

Assume for a competitive firm that MC = AVC at $12, MC = ATC at $20, and MC = MR at $16. This firm will:

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Answer #1

Since the ompetitive firm that MC = AVC at $12, MC = ATC at $20, and MC = MR at $16.

A purely competitive firm short-run supply curve will be that part of MC curve which lies above the minimum of the average variable cost curve.

Since the price=MC = MR=$16, and it is greater than the minimum of AVC=MC=$12, so this firm will continue to produce because the price is greater than AVC. It means MC above AVC=$12 is the supply curve of the perfectly competitive firm.

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