A profit-maximizing strategy becomes a loss minimization strategy when a firm in a perfectly competitive industry is producing where A) AVC

Name: A profit-maximizing strategy becomes a loss minimization strategy when a firm in a perfectly competitive industry is producing where A) AVC ATC. C) P = ATC. D) MR = MC < P.
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Question

A profit-maximizing strategy becomes a loss minimization strategy when a firm in a perfectly competitive industry is producing where
A) AVC < P < ATC.
B) P > ATC.
C) P = ATC.
D) MR = MC < P.

Quizplus · Accepted Answer

When AVC < P < ATC, the firm is covering its variable costs but not its total costs, so it minimizes losses by continuing to produce rather than shutting down.

A Profit-Maximizing Strategy Becomes a Loss Minimization Strategy When a Firm