- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 1. The Firm and Market Structures
- Subject 3. Marginal Revenue, Marginal Cost and Profit Maximization
CFA Practice Question
The firm's short-run supply curve is the ______.
A. marginal cost curve
B. marginal cost curve above average variable cost
C. marginal cost curve above average total cost
Explanation: The marginal cost curve shows what quantity the firm will produce, given that price is at least equal to minimum average variable cost. Below minimum average variable cost, the firm supplies zero in the short run.
User Contributed Comments 3
| User | Comment |
|---|---|
| danlan | Firm should produce at least the number where MC = AVC in order to continu |
| cahiz84 | If MC<AVC, then the firm should close down |
| maniben | bt if we see short run supply curve is yhe marginal cost curve. |