Question

The short run industry supply curve is the Group of answer choices sum of all of the individual firms' ATC curves above the MC. average of all of the individual firms' marginal cost curves above the AVC. sum of all of the individual firms' marginal cost curves above the AVC. average of all of the individual firms' ATC curves above the MC.

Answer 1

sum of all of the individual firms' marginal cost curves above the AVC.

Step-by-step explanation:

Marginal Cost (MC) can be defined as the cost incurred in the production of one unit of a product.

Average Variable Cost (AVC) can be defined as the total variable cost per unit of production. It is calculated by dividing total variable cost (TVC) by total output of production (Q);

`AVC = (TVC)/(Q)`

In a perfect competition, there are many buyers and sellers of homogeneous products, and there is free entry and exit in the market.

This simply means that, in a perfectly competitive market, there are many buyers and sellers (price takers) of homogeneous products (standardized products with substitute) and the market is free (practically open) to all individuals or business entities that are willing to trade all their goods and services.

The short run industry supply curve is the sum of all of the individual firms' marginal cost curves above the average variable cost (AVC). It is typically considered to be marginal cost curve for the industry.

Generally, industries always strive to maximize profits by increasing their level of output, such that P = MC. Also, the firms wouldn't be willing to leave or enter into the market because they are not making any profit, such that P=AC.