-The doughnut market is perfectly competitive. The figure above shows the costs of a typical doughnut producer. In the short run, the doughnut producer's supply curve is the curve running from point _______ to point E.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, a firm's short-run supply curve is the portion of the marginal cost curve that lies above the average variable cost curve. This is because a firm will only supply goods in the short run if the price covers the average variable cost. Without the figure, the typical interpretation is that point B represents the point where the marginal cost curve starts to be above the average variable cost curve, extending to point E, which usually represents the point where marginal cost intersects the firm's demand curve or the price line.

-The Doughnut Market Is Perfectly Competitive