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In the short run, fixed costs are fixed so a firm will concentrate on its variable costs.
If selling prices exceed average variable costs, it is worthwhile producing goods as revenue will exceed variable costs, so the supply of goods only begins once that happens.
However, as output increases it is assumed that marginal costs increase because of diminishing returns. The firm will be comparing the extra revenue form one more unit and the extra costs caused by making one more unit. Therefore, the firm’s short?run supply curve is the part of its marginal cost curve that lies above its average variable cost curve.
It links selling price offered and and quantity made.
There’s lots more material available if you ‘Google’ this. I’m not convinced great detail is needed for F1.
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