in determination of supply curve of firm why mc portion is taken as supply curve of firm iam not able to get logic of taking portion of mccurve so please explain in your words.
Dear Student,
Answer to your question is as follows :
Supply refers to quantity offered for sale at a given price at a particular point of time.
It is also said that all the supply curves are cost curves, but all cost curves are not supply curves.
Thus, Under perfect competition, in the short period, only MC curve is the supply curve.
As, in a perfectly competitive market, there are 3 profit maximising conditions. These are :
1) Price must be greater than or equal to minimum of SAVC curve at the euilibrium output.
2) MR=MC.
3) MC is upward sloping.
A perfectly competitive firm maximizes its profit by producing the quantity of output that balance marginal revenue and marginal cost.
In that, price equals marginal revenue and price also equal to marginal cost for a perfectly competitive firm.
Thus,
The marginal cost curve is thus the perfectly competitive firm's supply curve.
Regards
Answer to your question is as follows :
Supply refers to quantity offered for sale at a given price at a particular point of time.
It is also said that all the supply curves are cost curves, but all cost curves are not supply curves.
Thus, Under perfect competition, in the short period, only MC curve is the supply curve.
As, in a perfectly competitive market, there are 3 profit maximising conditions. These are :
1) Price must be greater than or equal to minimum of SAVC curve at the euilibrium output.
2) MR=MC.
3) MC is upward sloping.
A perfectly competitive firm maximizes its profit by producing the quantity of output that balance marginal revenue and marginal cost.
In that, price equals marginal revenue and price also equal to marginal cost for a perfectly competitive firm.
Thus,
The marginal cost curve is thus the perfectly competitive firm's supply curve.
Regards