The Short-Run Supply Curve of a Perfectly Competitive Firm

question 143

Multiple Choice

The short-run supply curve of a perfectly competitive firm

• A)intersects the minimum point of its short-run average total cost curve but not its short-run average variable cost curve.
• B)intersects the minimum point of its short-run average variable cost curve but not its short-run average total cost curve.
• C)intersects the minimum point of both its short-run average variable cost and its short-run average total cost curves.
• D)intersects the minimum point of its short-run average total cost curve and may or may not intersect the minimum point of its short-run average variable cost curve.

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Definitions:

Standard Cost System

An accounting system that assigns predetermined costs to products and services, which are then compared to actual costs for variance analysis.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and are a significant portion of production costs.

Raw Materials Inventory

The stock of basic materials that are used in production but have not yet been processed.

Standard Costs

Predetermined or budgeted costs for materials, labor, and overhead, used as benchmarks to measure actual performance and manage costs.