Which of the following statements is/are correct?
Statement I: 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 II: There is no difference between the short run supply curve and the long run supply curve of a firm under perfect competition.
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Neither Statement I nor Statement II is correct.
Statement I: 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). — False. The axes are swapped. Output is plotted on the x-axis and the market price on the y-axis.
Statement II: There is no difference between the short run supply curve and the long run supply curve of a firm under perfect competition. — False. The two differ. The short run curve is the rising part of SMC from the minimum AVC; the long run curve is the rising part of LRMC from the minimum LRAC.
NCERT (2026-27): “4.4 Supply Curve of a Firm … The supply curve of a firm shows the levels of output (plotted on the x-axis) that the firm chooses to produce corresponding to different values of the market price (plotted on the y-axis), again keeping technology and prices of factors of production unchanged. We distinguish between the short run supply curve and the long run supply curve.” |