Explanation of the Supply Curve of a Firm in Perfect Competition
In perfect competition, a firm is a price taker, meaning it cannot influence the market price of the product it sells. The firm's supply curve is determined by its marginal cost (MC) curve and its average variable cost (AVC) curve.

Rising Portion of the MC Curve
- The rising portion of the MC curve represents the point at which the firm's costs start to increase as output rises. This is because at this point, the firm has fully utilized its fixed inputs and must incur additional variable costs to produce more output.

Lies Above the AVC Curve
- The supply curve of a firm in perfect competition is the portion of the MC curve that lies above the AVC curve because a firm will only produce if the price at which it can sell its output is greater than or equal to the AVC. If the price falls below the AVC, the firm will shut down in the short run as it cannot cover its variable costs.

Example
- For example, let's say a firm's AVC curve is $10 at a certain level of output. If the market price is $12, the firm will continue to produce in the short run because it can cover its variable costs and make a profit. However, if the price falls to $8, the firm will shut down as it cannot cover its variable costs.
In conclusion, the supply curve of a firm in perfect competition is the rising portion of the MC curve that lies above the AVC curve because the firm will only produce if it can cover its variable costs and make a profit.