Consider the following statements about the supply curves of a compet…

Consider the following statements about the supply curves of a competitive firm:

(A) The short run supply curve is based on the SMC curve and the AVC curve.
(B) The long run supply curve is based on the LRMC curve and the LRAC curve.
(C) Both curves show zero output at prices below a minimum average cost: AVC in the short run and LRAC in the long run.
(D) The long run supply curve starts from the minimum of the AVC curve.
(E) The short run supply curve starts from the minimum of the SAC curve.

Which of the statements given above are correct?

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → (A), (B) and (C) only

(A) The short run supply curve is based on the SMC curve and the AVC curve. — Correct. It is the rising part of the SMC curve from and above the minimum AVC.

(B) The long run supply curve is based on the LRMC curve and the LRAC curve. — Correct. It is the rising part of the LRMC curve from and above the minimum LRAC.

(C) Both curves show zero output at prices below a minimum average cost: AVC in the short run and LRAC in the long run. — Correct. Below the minimum AVC (short run) or minimum LRAC (long run), the firm produces nothing.

(D) The long run supply curve starts from the minimum of the AVC curve. — Incorrect. The long run supply curve starts from the minimum of the LRAC curve. AVC belongs to the short run.

(E) The short run supply curve starts from the minimum of the SAC curve. — Incorrect. The short run supply curve starts from the minimum of the AVC curve. The minimum SAC is the break-even point, which lies higher up on the curve.

NCERT (2026-27): “4.4.1 Short Run Supply Curve of a Firm … Combining cases 1 and 2, we reach an important conclusion. A firm’s short run supply curve is the rising part of the SMC curve from and above the minimum AVC together with zero output for all prices strictly less than the minimum AVC.”

“4.4.2 Long Run Supply Curve of a Firm … A firm’s long run supply curve is the rising part of the LRMC curve from and above the minimum LRAC together with zero output for all prices less than the minimum LRAC.”