Assume for a competitive firm that MC AVC at 12 MC ATC at

Assume for a competitive firm that MC = AVC at $12, MC = ATC at $20, and MC = MR at $16. This firm will:

Solution

Since the ompetitive firm that MC = AVC at $12, MC = ATC at $20, and MC = MR at $16.

A purely competitive firm short-run supply curve will be that part of MC curve which lies above the minimum of the average variable cost curve.

Since the price=MC = MR=$16, and it is greater than the minimum of AVC=MC=$12, so this firm will continue to produce because the price is greater than AVC. It means MC above AVC=$12 is the supply curve of the perfectly competitive firm.