Question

14. Derive and explain the nature of short run supply curve in the context of a perfectly
competitive market structure. In this context, show diagrammatically the breakeven and shut-
down points respectively.
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Answer 1

Explanation:

Recall that the supply of a commodity is a derived function. ... Under perfect competition, in the short period, only MC curve is the supply ... Note that the firm at the shut-down point is indifferent between operating