In the short run, a perfectly competitive ﬁrm is minimizing losses at an output of 250 units. If the market price is £5 and the average cost is £8 per unit, what is the ﬁrm's total loss?
A) £750
B) £2000
C) £1250
D) £400

Question

Quizplus · Accepted Answer

The firm's total loss is calculated by the difference between the average cost and the market price, multiplied by the quantity of output. Here, it's (£8 - £5) * 250 = £3 * 250 = £750.

In the Short Run, a Perfectly Competitive ﬁRm Is Minimizing