In the short run,a perfectly competitive firm produces output and incurs an economic loss if:

Question

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In the short run, a perfectly competitive firm will continue to produce output even if it incurs an economic loss, as long as the price (P) covers its average variable costs (AVC) but is less than its average total costs (ATC). This is because, in the short run, the firm can cover its variable costs and some of its fixed costs, minimizing losses compared to shutting down.

In the Short Run,a Perfectly Competitive Firm Produces Output and Incurs