1. The perfectly competitive firm\'s short run supply curve is the: a. Average c
ID: 1104975 • Letter: 1
Question
1. The perfectly competitive firm's short run supply curve is the: a. Average cost curve above the minimum of the marginal cost curve. b. Marginal cost curve above its minimum point. c. Marginal cost curve above the minimum of the average variable cost curve. d. The entire marginal cost curve. 2. Which of the following is NOT a condition for long run equilibrium under pure competition? a. All firms are maximizing profits. b. Every firm is earning zero economic profit. c. Quantity supplied equals quantity demanded. d. Producer surplus is zero. 3. The market supply curve is calculated by summing the: a. Quantities that individual firms would supply at b. The prices that individual firms would receive at c. Quantities that individual firms would supply at a d. The prices that individual firms would receive at a various prices. each quantity they supply. given price. given quantity they supply.Explanation / Answer
Question 1 correct option is option C
The minimum value of average variable cost plays a crucial role in deciding the supply curve of a firm in a competitive market. Marginal cost curve that cuts average variable cost curve from below is considered to be the supply curve of a firm because price below the minimum point of average variable cost is considered as a shutdown price and the firm does not produce below this.
Question 2 the correct option is option D
Producer surplus is considered to be the difference between the price prevailing in the market and the minimum price that the particular firm is willing to charge. In the long run supply and demand curve intersect to determine the price and quantity and producer surplus and consumer surplus are maximized.
Question 3 the correct option is option C.
Market supply curve can be determined by adding the individual supply curves which are determined as a function of price.
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