Exhibit 8.7

-Refer to Exhibit 8.7,which shows the demand and the cost curves of a perfectly competitive firm.At what quantity is the firm's loss minimized?

Question

Exhibit 8.7
 
-Refer to Exhibit 8.7,which shows the demand and the cost curves of a perfectly competitive firm.At what quantity is the firm's loss minimized?

Quizplus · Accepted Answer

In a perfectly competitive market, a firm's loss is minimized when it produces at the quantity where marginal cost equals marginal revenue, which typically occurs at the point where the price is equal to the average variable cost. This is often at the point where the firm covers its variable costs but not its total costs, minimizing losses.

Exhibit 8.7 -Refer to Exhibit 8.7,which Shows the Demand and the Cost