CFA Practice Question

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CFA Practice Question

Because the marginal cost curve tells us how much output a firm will produce at a given price, the marginal cost curve is the firm's ______.

A. average cost curve
B. marginal revenue curve
C. supply curve
Correct Answer: C

Firms choose output by setting price equal to marginal cost in a perfectly competitive market.

User Contributed Comments 1

User Comment
Bududeen This should read.... In a perfectly competitive market, a firm chooses output ,at least, at the point where it's marginal cost equals the market price. ..because the firm is a price-taker
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