The Supply Curve of a Perfectly Competitive Firm in the Short

question 163

Multiple Choice

The supply curve of a perfectly competitive firm in the short run is

• A)the firm's average variable cost curve.
• B)the portion of the firm's marginal cost curve below the minimum point of the average variable cost curve.
• C)the portion of the firm's marginal cost curve above the minimum point of the average variable cost curve.
• D)the portion of the firm's marginal cost curve above the minimum point of the average total cost curve.

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Definitions:

External Costs

Costs incurred as a result of an economic activity that are not reflected in the market price, often shouldered by society or the environment.

Unemployment

A situation where individuals who are able and willing to work are not able to find employment.

Efficient Allocations

The optimal distribution of resources among competing uses to achieve the highest overall level of welfare or utility.

Market Failures

Situations where the allocation of goods and services by a free market is not efficient, often leading to a net social welfare loss.