A Perfectly Competitive Firm's Supply Curve in the Short Run

question 215

Multiple Choice

A perfectly competitive firm's supply curve in the short run is ________.

• A) its marginal cost curve
• B) its marginal cost curve above the marginal revenue schedule
• C) its marginal cost curve above its average total cost curve
• D) its marginal cost curve above its average variable cost curve

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Definitions:

Total Revenues

The total amount of income generated by the sale of goods or services related to the company's primary operations.

Economic Profits

The surplus or profit earned by a firm over and above the total costs of production, including both explicit and implicit costs, signifying an above-normal return.

Accounting Profits

The financial gain calculated by subtracting total explicit costs from total revenue, using generally accepted accounting principles (GAAP).

Perfectly Competitive Industry

This refers to a market structure where numerous small firms compete against each other with no single company dominating the market, selling identical products, and having easy market entry and exit.