(Table: Total Cost for a Perfectly Competitive Firm) Use Table: Total Cost for a Perfectly Competitive Firm.In the short run,the firm will produce,but at a loss,if the price is:

A) $2.00.
B) $2.50.
C) $3.50.
D) $4.50.

Question

Tandra Rahman · Accepted Answer

Final Answer : C, Explanation :  To determine if the firm will produce at a loss in the short run, we need to compare the price to the minimum point on the average variable cost curve (AVC). In this case, the minimum point occurs at a quantity of 3, where AVC is $3.33. If the price is less than $3.33, the firm will not be able to cover its variable costs and will shut down.At a price of $2.00 or $2.50, the firm would definitely shut down because the price is below the minimum AVC.At a price of $4.50 or higher, the firm would make a profit because the price is above the minimum point on the average total cost (ATC) curve.The only remaining option is C) $3.50. At this price, the firm would be able to cover its variable costs and produce in the short run, but it would still operate at a loss because the price is below the minimum point on the ATC curve. Therefore, the best choice is C.

(Table: Total Cost for a Perfectly Competitive Firm) Use Table: Total Cost for a Perfectly Competitive Firm.In the short run,the firm will produce,but at a loss,if the price is:

A) $2.00.
B) $2.50.
C) $3.50.
D) $4.50.

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(Table: Total Cost for a Perfectly Competitive Firm) Use Table: Total Cost for a Perfectly Competitive Firm.In the short run,the firm will produce,but at a loss,if the price is:A) $2.00.B) $2.50.C) $3.50.D) $4.50.

Definitions

Learning Objectives

Learning Objectives

Related questions

(Table: Total Cost for a Perfectly Competitive Firm) Use Table: Total Cost for a Perfectly Competitive Firm.In the short run,the firm will produce,but at a loss,if the price is:

A) $2.00.
B) $2.50.
C) $3.50.
D) $4.50.