The Short-Run Supply Curve for a Firm in a Perfectly

question 168

Multiple Choice

The short-run supply curve for a firm in a perfectly competitive market is

• A)horizontal.
• B)likely to slope downward.
• C)determined by forces external to the firm.
• D)the portion of its marginal cost curve that lies above its average variable cost.

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Definitions:

Break-even Point

The point at which total costs and total revenues are equal, meaning the business is neither making a profit nor suffering a loss.

Variable Expenses

Costs that change in proportion to the level of activity or volume of production in a business.

Sales

The total revenue generated from goods or services sold by a company during a specific period.

Contribution Margin Ratio

The ratio of contribution margin to sales revenue, indicating the percentage of each sales dollar available to cover fixed costs and generate profit.