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-(Figure: Prices,Cost Curves,and Profits) Use Figure: Prices,Cost Curves,and Profits.If the price is P₁and the firm decides to produce at output Q₁,then the firm earns:

Question

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-(Figure: Prices,Cost Curves,and Profits) Use Figure: Prices,Cost Curves,and Profits.If the price is P₁and the firm decides to produce at output Q₁,then the firm earns:

Quizplus · Accepted Answer

At output Q₁, the firm's total cost is greater than the revenue it generates at the given price, resulting in a loss. The loss would be equal to the vertical distance between the average total cost curve (point c) and the price line (point a), multiplied by the quantity produced (Q₁). Therefore, the correct answer is option B, which is the formula for this loss: (ca)× Q_1..

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