A Competitive Firm

question 19

Multiple Choice

A competitive firm:

• A)does not have a supply curve.
• B)has a supply curve only if it earns a profit.
• C)has a supply curve equal to its marginal cost curve above the minimum AVC point.
• D)has a supply curve equal to its marginal cost curve.

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Definitions:

Long Run

A term in economics referring to a period wherein all inputs can be adjusted, including those that are typically fixed in the short run.

Variable Costs

Charges that adjust directly in response to the quantity of production or output.

Average Total Cost

The total cost divided by the quantity of output produced, representing the cost per unit of output.

Marginal Cost

The outgoings associated with the production of one more unit of a product or service.