In short run the supply curve of perfect competitive firm is the summation of the upward sloping portion of short run marginal cost when price is more than or equal to the minimum average variable cost and vertical portion of price axis when price is less than minimum average variable cost.

When price is more than or equal to average variable cost at market price

At market price P₁ the 3 conditions for equilibrium are being fulfilled

• MC equals to MR at d

• MC is upward sloping

• Price exceeds the minimum of average variable cost

At this price the firm is producing profit-maximizing output Q₁, here the supply curve is regarded as upward sloping part of marginal cost.

When the price is less than the minimum of average variable cost

At price P₂ which is lesser than the minimum average variable cost, at this price, the firm cannot produce as it cannot even cover its variable cost and so it will incur losses, which means that the form would produce nothing. Thus the firm will not produce anything at this price and thereby the quantity supplied will be zero the firm's supply curve is indicated on price axis.