Figure 10-2

-Figure 10-2 shows demand and short-run cost curves for a perfectly competitive firm.In the short run, this firm would

Question

Figure 10-2
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-Figure 10-2 shows demand and short-run cost curves for a perfectly competitive firm.In the short run, this firm would

Quizplus · Accepted Answer

In the short run, the firm will produce where marginal cost equals marginal revenue, which is at output Q1. At this output level, the price (determined by the market demand curve) is lower than the average total cost, meaning the firm is earning economic losses. Therefore, the correct choice is B.

Figure 10-2 ​

Figure 10-2