Explain why the following statement about supply curves is false. this is in a perfectly competitive setting. a competive firm's supply curve depends only on its marginal cost.any other cost concept is irrelevent for supply decisions.

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It is mostly true that the supply curve is the same as the marginal cost curve.  But it's not *completely* true.  The MC curve is the same as the supply curve *but only* above the average variable cost curve.  That's because when MC is lower than AVC, the firm shuts...

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It is mostly true that the supply curve is the same as the marginal cost curve.  But it's not *completely* true.  The MC curve is the same as the supply curve *but only* above the average variable cost curve.  That's because when MC is lower than AVC, the firm shuts down.

So, MC is the only thing that affects the supply curve for most of the supply curve's range.  But the ending point of the supply curve is affected by the AVC curve.

For the most part, the statement is true, but AVC is also relevant in making the decision whether to shut down (stop supplying).

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