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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

Why is the perfectly competitive firm’s supply curve the portion of its marginal cost curve that is above its average variable cost curve?

To determine

Explain why the reason for a perfectly competitive firm’s marginal cost curve is above its average variable cost curve.

Explanation

Figure 1 shows the short run supply curve of a perfectly competitive firm.

In Figure 1, the vertical axis measures cost, and the horizontal axis measures quantity. The upward sloping curve “MC” is the marginal cost curve, and “AVC” is the average variable cost...

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