In summary, the short-run supply curve of a purely competitive producer is based primarily on its marginal cost curve.
A purely competitive producer's marginal cost curve forms the bulk of the short-run supply curve (MC curve). In the short term, a business's fixed costs are fixed and cannot be modified, therefore the firm can only vary its output by adjusting its variable costs, such as the quantity of inputs it utilizes. The marginal cost curve depicts the connection between the volume of an output and the additional cost of generating it. It slopes upward because when the company generates more production, the cost of generating each extra item of production grows. This is because the company can reach a point when all of its capacity is utilized, forcing it to employ less effective techniques or raise costs.
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