Consider the following short- run cost curves for a perfectly competitive firm. FIGURE 9- 1
-Refer to Figure 9- 1. This perfectly competitive firm would incur economic losses at prices below
A) P1.
B) P2.
C) P3.
D) P4.
E) P5.

Question

Consider the following short- run cost curves for a perfectly competitive firm.  FIGURE 9- 1
-Refer to Figure 9- 1. This perfectly competitive firm would incur economic losses at prices below
A) P1. 
B) P2. 
C) P3. 
D) P4. 
E) P5.

Quizplus · Accepted Answer

In a perfectly competitive market, a firm incurs economic losses when the price falls below the average total cost (ATC). P3 is typically the price where the firm covers its ATC, so prices below P3 would result in losses.

Consider the Following Short- Run Cost Curves for a Perfectly