Ayushi posted an Question
June 30, 2020 • 20:39 pm 30 points
  • UGC NET
  • Economics

43. the firm'a mc curve above avc is also knowrn as its (2 optimum output (4) cost function prodcution frontier (1) (3) supply curve (1) srht hfer (3) tg a (2)

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    Nidhi taparia

    Interestingly enough, while supply curve is derived from MC curve, demand curve is derived from AR curve. Hence the theory of costs and revenue act as intuition behind the general theory of demand and supply.

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    Nidhi taparia best-answer

    The firm's MC curve above the AVC is actually its (3) SUPPLY CURVE. Have a look at the figure for a better explanation. Think of it this way. Marginal costs depict what is the additional cost that the seller has to bear to produce one extra unit of his product. Automatically, this will be representative of the price at which he will be willing to offer the successive units. Which is nothing else but the supply curve.

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  • Harini best-answer

    40. the correct option is 3 the portion of the MC curve above the AVC cost is referred to as Supply curve. 41. the correct option is 2 when the supply curve is perfectly elastic, any change in price will affect the supply immediately as in that case the economic rent will not arise.

  • comment-profile-img>
    Souradeep roychowdhury

    Correct answer is 3. supply curve. This is because AVC is the minimum cost which the firm has to recover from the sales of a product to run its business. If a firm is not being able to recover its AVC, it will stop production and supply. So AVC is the minimum benchmark which a firm has to earn frol the market to keep its supply operational. Thus, any point that is situated above AVC would be the supply curve of the firm.

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