Question
The minimum point of a firm's LRAC is Rs 8, at which it produces a quantity of 500. Which of the following price-quantity pairs (p,q) can lie on the supply curve?
Answer: Option D
:
D
The supply curve is the portion of the MC curve above the LRAC. It starts from the minimum point of the LRAC. Since the supply curve is upward sloping, for any point on the supply curve, the price will be greater than Rs 8 and quantity greater than 500 units. Only option D satisfies this condition.
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:
D
The supply curve is the portion of the MC curve above the LRAC. It starts from the minimum point of the LRAC. Since the supply curve is upward sloping, for any point on the supply curve, the price will be greater than Rs 8 and quantity greater than 500 units. Only option D satisfies this condition.
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