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Home Questions 27C3W8ZK9G
Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Theory of Firms under Perfect Competition

Question:

Assertion: Under perfect competition, any factor that affects a firm’s marginal cost curve is a determinant of its supply curve.

Reasoning: Under perfect competition, a firm’s supply curve is a part of its marginal cost curve.

Options:

Both Assertion (A) and reasoning (R) are correct and R is the correct explanation of A.

Both Assertion (A) and reasoning (R) are correct and but R is not the correct explanation of A.

Assertion (A) is true but Reasoning (R) is not correct.

Assertion (A) is not true but Reasoning (R) is correct.

Correct Answer:

Both Assertion (A) and reasoning (R) are correct and R is the correct explanation of A.

Explanation:

The correct answer is option 1: Both Assertion (A) and reasoning (R) are correct and R is the correct explanation of A.

Assertion: Under perfect competition, any factor that affects a firm’s marginal cost curve is a determinant of its supply curve. This is true.

Reasoning: Under perfect competition, a firm’s supply curve is a part of its marginal cost curve. This is true. Under perfect competition, the firm’s supply curve corresponds to the portion of its MC curve that lies above the AVC.

 

  • Since the firm’s supply curve is derived from the MC curve, any factor affecting MC automatically affects supply.
  • Therefore, the reasoning correctly supports the assertion.

 

 

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