Microeconomics
Microeconomics
13th Edition
ISBN: 9781337617406
Author: Roger A. Arnold
Publisher: Cengage Learning
Question
Chapter 9, Problem 1QP
To determine

Whether the given statement is true or false.

Expert Solution & Answer
Check Mark

Explanation of Solution

Technically, the statement the “firm’s entire marginal cost curve is its short-run supply curve”, which is not true. The marginal cost curve and its short-run supply curve are different. The short-run supply curve is the firm’s entire marginal cost curve only when the price of the goods is above the minimum point of the average cost curve. A firm must cover its variable cost in the short run.

Economics Concept Introduction

Marginal cost (MC): Marginal cost refers to the amount of additional costs incurred in the process of increasing one more unit of output. Marginal cost curve shows the additional cost for the different levels of output.

Short-run supply curve: In the short run, it is a curve that shows the relationship between the price level in the economy and the supply in the economy by the firms.

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“The firm’s entire marginal cost curve is its short-run supply curve.” Is the preceding statement true or false? Why?
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