Question

In a market with 1,000 identical firms, the short-run market supply is the

a. marginal cost curve above average variable cost for a typical firm in the market.
b. quantity supplied by the typical firm in the market at each price.
c. sum of the quantities supplied by each of the 1,000 individual firms at each price.
d. sum of the prices charged by each of the 1,000 individual firms at each quantity.

Answer 1

Answer: Option(a) is correct.

Step-by-step explanation:

Correct Option : Marginal cost curve above average variable cost for a typical firm in the market.

In a market of perfect competition, the shutdown price of the firms will be minimum point of average variable cost. So, there is supply of goods by the firms if the price is equal or above the shutdown point of the firm.

Therefore, the supply curve of the firm is the above part of the MC curve from the minimum point of average variable cost.