Question

When price exceeds average variable cost in the short run, a competitive firm's marginal cost curve is regarded as its supply curve because A. among the various cost curves, the marginal cost curve is the only one that slopes upward. B. the position of the marginal cost curve determines the price for which the firm should sell its product. C. the firm is aware that marginal revenue must exceed marginal cost in order for profit to be maximized. D. the marginal cost curve determines the quantity of output the firm is willing to supply at any price.

Answer 1

Answer:D. the marginal cost curve determines the quantity of output the firm is willing to supply at any price.

Explanation: The marginal cost is the change in total cost of producing a set of product as a result of adding one more unit to the production.

For example, if a firm has to buy one more production equipment in order to increase the number of product is the cost associated with that additional equipment is a MARGINAL COST.

THE MARGINAL COST CURVE DESCRIBES THE RELATIONSHIP BETWEEN THE MARGINAL COST OF A FIRM IN THE SHORT-TERM PRODUCTION OF A GOOD OR SERVICE AND THE QUANTITY OF FINISHED GOODS PRODUCED BY A FIRM.