For a price-taking firm, its short-run supply curve is the positively-sloped portion of the firm’s short-run marginal cost curve above the point of minimum average total cost.

Question

BlackTom AI · Accepted Answer

The question asks about the short-run supply curve for a price-taking firm and states a specific condition.
Option 1: True. This would claim that the short-run supply curve is the positively-sloped portion of the firm’s short-run marginal cost (MC) curve above the point of minimum average total cost (ATC). In standard microeconomics, the firm’s short-run supply curve is the portion of the MC curve that lies above the shutdown point, which occurs at the minimum of average variable cost (AVC), not at the minimum of ATC. Since the minimum ATC is not the relevant threshold for the firm’s willingness to supply in the short run, this statement misidentifies the criterion and is therefore incorrect.
Option 2: False. This option correctly states that the short-run supply curve for a price-taking firm is the portion of the MC curve that is above AVC, specifically above the shutdown point where MC > AVC. The ATC curve is composed of fixed and variable costs; the firm’s decision to supply in the short run depends on covering variable costs, not necessarily achieving minimum ATC. Therefore, this description aligns with standard theory and is correct as the false statement is the one asserting the ATC threshold.
In summary, the assertion tied to the ATC threshold is inconsistent with the conventional depiction of a competitive firm’s short-run supply, which depends on MC above AVC rather than MC above minimum ATC.

2251-ECON-301-01Z-J1-1027 Quiz 10 (1% of Course Grade) - Chapter 23 - Firm Supply

For a price-taking firm, its short-run supply curve is the positively-sloped portion of the firm’s short-run marginal cost curve above the point of minimum average total cost.

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