Figure 14-1
Suppose that a firm in a competitive market has the following cost curves:
-Refer to Figure 14-1. The firm will earn a negative economic profit but remain in business in the short run if the market price is

Question

Figure 14-1
Suppose that a firm in a competitive market has the following cost curves:  ​
-Refer to Figure 14-1. The firm will earn a negative economic profit but remain in business in the short run if the market price is

Quizplus · Accepted Answer

A firm will earn a negative economic profit but continue to operate in the short run if the market price covers its variable costs but not its total costs. This typically occurs when the price is above the average variable cost but below the average total cost. The price range given in option C suggests that it covers the firm's average variable costs (indicating operation is feasible) but is below the average total cost (indicating a loss when considering all costs).

Figure 14-1 Suppose That a Firm in a Competitive Market Has the Has