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JAMB Economics 1990 Question 17

Question 17

Market Structures

In the diagram, RTX and STY are the marginal cost and the average cost curves respectively of a perfectly competitive firm. The supply curve of the firm is indicated by

Diagram for this question
  1. A.TX
  2. B.RT
  3. C.ST
  4. D.TY
Show the answer and explanation

Answer: A (TX)

Explanation

A competitive firm's supply curve is its marginal cost curve above the lowest point of the average cost curve. MC cuts AC at T, so the supply curve is TX.