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II Answer the following questions in 20 sentences.Explain the short run supply curve of a firm with the help of a diagram.Ans: Supply of a firm refers to the quantity that it chooses to sell at a given price. |
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Answer» Short run supply curve: In a perfectly competitive market, the short run supply curve is that part of its Marginal cost curve where the Marginal Cost curve is rising from the Average Variable Cost curve. Thus, it is evident from the diagram that when price rises the quantity supplied also rises and vice versa. the monopoly firms aims at profit maximum under short run equilibrium with the case of zero cost profit maximization is reached at a point where TR is at maximum Therefore..TR=TC when TC is zero, profit is maximum..when TR is maximum let us understand this with the following example suppose there is a village which has only one well from which water is supplied to villagers. All villagers are completely depended on it. the well is owned by one person who purchase the water has to draw the water out of the well.the well owner is thus a monopolist with zero cost of production
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