Assume all fixed costs are sunk The short run supply curve f

Assume all fixed costs are sunk. The short run supply curve for a perfectly competitive firm is

A. the portion of its short run marginal cost curve that lies above its short run average total cost curve.

B. the portion of its short run marginal cost curve that lies above its average variable cost curve.

C. the portion of the average variable cost curve that lies above its short run marginal cost curve.

D. the portion of its short run marginal cost curve that lies above its average fixed cost curve.

E. the portion of its short run average total cost curve that lies above its short run marginal cost curve.

Solution

For a perfectly competitor firm, the short run supply curve is the upward rising portion of short run MC curve that is above the AVC curve.

Correct option (B).