Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Theory of Firms under Perfect Competition

Question:

Arrange the given statements to show the impact on a firm's supply curve due to its determinants.

(A) Organisational innovation allows the firm to use fewer units of inputs.
(B) Any factor that affects a firm's marginal cost curve is a determinant of its supply curve.
(C) At any given market price, the firm now supplies more units of output.
(D) The marginal cost will shift downward.

Choose the correct answer from the options given below.

Options:

(A), (B), (C), (D)

(B), (A), (C), (D)

(B), (A), (D), (C)

(C), (B), (D), (A)

Correct Answer:

(B), (A), (D), (C)

Explanation:

The correct answer is Option (3) → (B), (A), (D), (C)

(B) Any factor that affects a firm’s marginal cost (MC) curve is a determinant of its supply curve. → This is the starting point, setting the condition for supply changes.

(A) Suppose there is organisational innovation that allows the firm to use fewer inputs for the same output. → This is the specific factor affecting MC.

(D) As a result, the marginal cost curve shifts downward (because production becomes cheaper). → This is the immediate impact on cost structure.

(C) Therefore, at any given price, the firm can now supply more output. → This is the final effect on the supply curve.