Which of the following statement (s) is/are correct?

Statement 1: The supply curve of a firm under perfect competition shows the levels of output (plotted on the y-axis) that the firm chooses to produce corresponding to different values of the market price (plotted on the x-axis)

Statement 2: there is no difference between short run supply curve and the long run supply curve under perfect competition.

None of the given statement is correct.

The correct answer is Option 4: None of the given statement is correct.

Statement 1: The supply curve of a firm under perfect competition shows the levels of output (plotted on the y-axis) that the firm chooses to produce corresponding to different values of the market price (plotted on the x-axis). This is false.

• The supply curve under perfect competition shows the relationship between price and quantity supplied.
• In a correct supply curve, price (P) is plotted on the y-axis, and quantity supplied (Q) is plotted on the x-axis.
• The given statement incorrectly says that output is on the y-axis and price on the x-axis, which is incorrect.

 Statement 2: there is no difference between short run supply curve and the long run supply curve under perfect competition. This is false. 

• • In the short run, firms cannot freely enter or exit the market, and supply depends on firms' existing capacity.
  • In the long run, firms can enter or exit based on profitability, leading to a more elastic supply curve.
  • The short-run supply curve of a perfectly competitive firm is the portion of its marginal cost (MC) curve that lies above its average variable cost (AVC) curve.
  • The long-run supply curve reflects the firm's ability to adjust all its inputs. It is the portion of the long run marginal cost curve above the long run average cost curve. It is also affected by entry and exit of firms.
  • Since market adjustments take place over time, the long-run supply curve differs from the short-run supply curve.