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JAMB Economics 2002 Question 33

Question 33

Market Structures

Under conditions of perfect competition, a firm's supply curve is determined by its

  1. A.total cost curve
  2. B.marginal cost curve
  3. C.variable cost curve
  4. D.fixed cost curve
Show the answer and explanation

Answer: B (marginal cost curve)

Explanation

A competitive firm produces where price = marginal cost, so its supply curve is its marginal cost curve above average variable cost.