Figure 14-1

-Refer to Figure 14-1.When market price is at P₂,what would a firm producing output level Q₁ experience

Question

Figure 14-1
 
-Refer to Figure 14-1.When market price is at P₂,what would a firm producing output level Q₁ experience

Quizplus · Accepted Answer

At output level Q₁, the firm's average total cost (ATC) is higher than the market price P₂. This means that the firm is operating at a loss, as the revenue generated by selling Q₁ units at P₂ is not enough to cover the costs of producing those units. Therefore, the correct answer is A - losses, because P₂ < ATC at output level Q₁.

Figure 14-1 -Refer to Figure 14-1.When Market Price Is at P₂,what Would