Figure 10-2

-Figure 10-2 shows demand and short-run cost curves for a perfectly competitive firm.At its profit-maximizing output, the firm's total ____ is represented by area ____.

Question

Figure 10-2
​ 
-Figure 10-2 shows demand and short-run cost curves for a perfectly competitive firm.At its profit-maximizing output, the firm's total ____ is represented by area ____.

Quizplus · Accepted Answer

In a perfectly competitive market, the profit-maximizing output is where marginal cost equals marginal revenue. If the price is below average total cost at this output, the firm incurs a loss. The area ADEC represents the total loss, as it is the difference between total cost and total revenue.

Figure 10-2 ​

Figure 10-2