# How is the supply curve of perfectly competitive firm determined?

## How is the supply curve of perfectly competitive firm determined?

The individual supply curve shows how much output a firm in a perfectly competitive market will supply at any given price. The firm chooses its quantity such that price equals marginal cost, which implies that the marginal cost curve of the firm is the supply curve of the firm.

### What is the supply of a perfectly competitive firm?

A perfectly competitive firm’s supply curve is that portion of its marginal cost curve that lies above the minimum of the average variable cost curve. A perfectly competitive firm maximizes profit by producing the quantity of output that equates price and marginal cost.

#### What is the supply curve of a firm in short run?

The short run supply curve is the marginal cost curve at and above the shutdown point. The portions of the marginal cost curve below the shutdown point are not part of the supply curve because the firm is not producing in that range.

Which is part of the short run supply curve?

Thus, only the part of the short run marginal cost curve which lies above the average variable cost forms the short-run sup­ply curve of the firm. In Fig. 23.9 the thick portion of the short-run marginal cost curve SMC represents the short-run supply curve of the firm.

What is the supply curve for a perfectly competi?

The supply curve for a firm in a perfectly competitive market in the short run is A, that firm’s marginal cost curve for prices at or above average variable cost B, that firm’s marginal revenue curve C, that firm’s marginal marginal cost vurve for prices at or above This problem has been solved!

## How does the law of supply affect short run supply?

Short-Run Supply. As the market price rises, the firm will supply more of its product, in accordance with the law of supply. If, however, the market price, which is the firm’s marginal revenue curve, falls below the firm’s average variable cost, the firm will shut down and supply zero output.

### What does the short run marginal cost curve mean?

The short-run mar­ginal cost curve of the firm therefore indicates the quantities which the firm will produce in the short run at different prices. Consider Figure 23.9 at price OP, the firm will produce and offer for sale OM quantity of the good, because at OM quantity of the good, price OP equals marginal cost.