Final answer:
The short-run supply curve of a competitive firm is the portion of the marginal cost curve above average variable cost. This supply curve can shift upwards if marginal costs increase, leading to a higher price point required to produce the same quantity or a lower quantity supplied at any given price.
Step-by-step explanation:
The competitive firm's short-run supply curve is that portion of the marginal cost curve that lies above the average variable cost. A perfectly competitive firm's supply curve is derived from its marginal cost (MC) curve, specifically the segment of the MC curve that lies above the minimum point of the average variable cost (AVC) curve. Firms will supply where the price (P) equals marginal cost (MC), ensuring that the price is greater than the minimum AVC to cover their costs in the short run and avoid losses.
If marginal costs increase, the firm's supply curve will shift upwards since the firm will only supply at prices that cover the higher marginal costs. This implies that at any given price above the original supply curve, a smaller quantity will be supplied or higher prices will be needed to elicit the same quantity supplied as before.