Figure 6.3
-Figure 6.3 shows the cost structure of a firm in a perfectly competitive market. If the market price is $3 and the firm is currently producing 100 units. If the firm produces zero unit in the short run, it will reduce its economic loss by:

Question

Quizplus · Accepted Answer

If the firm produces zero units, it will avoid the variable cost of $6 per unit, which is $600 (100 units x $6 per unit). In addition, it will save the fixed cost of $300, which is the minimum amount the firm must pay even if it produces zero units. Therefore, the firm will reduce its economic loss by $600 + $300 = $900.

Figure 6.3 -Figure 6.3 Shows the Cost Structure of a Firm in Firm