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- Subject
- Costs , Supply And Perfect Competitioneconomics-mcqs › costs-supply-and-perfect-competition
- Published
- 2 Jun 2019
- Last updated
- 28 May 2026
In the context of a perfectly competitive firm, what represents its short-run supply curve and its long-run supply curve respectively?
Multiple choice question for Costs , Supply And Perfect Competition. Select an option, then review the explanation below.
Explanation
For a competitive firm, the short-run supply curve corresponds to the portion of the short-run marginal cost (SMC) curve that lies above the short-run average variable cost (SAVC). Similarly, the long-run supply curve is represented by the segment of the long-run marginal cost (LMC) curve that is above the long-run average cost (LAC). This is because the firm will only supply output when price covers variable costs in the short run and average costs in the long run.
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Practice related questions from the same subject.
- 1.Under what condition will a firm cease production and produce nothing in the short term?
- 2.In the short run, the average total cost is composed of which two components?
- 3.What is the relationship between marginal cost and average cost when the average cost is decreasing and when it is increasing?
- 4.What does it indicate when the long-run average cost curve slopes downward from left to right?
- 5.Which characteristic best describes a monopoly market structure?