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Above the minimum of average variable cost, the short-run supply curve of a perfectly competitive firm coincides with its:
AMarginal cost curve
BAverage total cost curve
CAverage revenue curve
DAverage fixed cost curve
Answer & Solution
Correct answer: A. Marginal cost curve
1. A competitive firm equates price to marginal cost to maximise profit.
2. For each price above AVC, the firm supplies the quantity where MC equals that price.
3. So the MC curve traces the quantity supplied at each price.
4. Hence the MC curve above AVC is the firm's short-run supply curve.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 4 Unit III "Price-Output Determination under Different Market Forms", p.5_
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