Figure 14-3
Suppose a firm operating in a competitive market has the following cost curves:
-Refer to Figure 14-3. In the short run, if the market price is higher than P₄ but less than P₆, individual firms in a competitive industry will earn

Question

Figure 14-3
Suppose a firm operating in a competitive market has the following cost curves: Figure 14-3 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-3. In the short run, if the market price is higher than P<sub>4</sub> but less than P<sub>6</sub>, individual firms in a competitive industry will earn A) positive profits. B) zero profits. C) losses but will remain in business. D) losses and will shut down.

Figure 14-3 Suppose a firm operating in a competitive market has the following cost curves: -Refer to Figure 14-3. In the short run, if the market price is higher than P<sub>4</sub> but less than P<sub>6</sub>, individual firms in a competitive industry will earn A) positive profits. B) zero profits. C) losses but will remain in business. D) losses and will shut down.

-Refer to Figure 14-3. In the short run, if the market price is higher than P₄ but less than P₆, individual firms in a competitive industry will earn

Quizplus · Accepted Answer

If the market price is higher than the average variable cost (P₄) but less than the average total cost (P₆), firms cover their variable costs and part of their fixed costs, leading to positive profits but not enough to cover all costs fully.

Figure 14-3 Suppose a Firm Operating in a Competitive Market Has the Has