Graph 14-3 This graph depicts the cost structure of a profit-maximising firm in a competitive market.Use the graph to answer the following question(s).
-Refer to Graph 14-3.If the firm is in a short-run position where P

Question

Graph 14-3  This graph depicts the cost structure of a profit-maximising firm in a competitive market.Use the graph to answer the following question(s).
-Refer to Graph 14-3.If the firm is in a short-run position where P < AVC, it is most likely to be on what segment of its supply curve?

Quizplus · Accepted Answer

When a firm is in a short-run position where price (P) is less than average variable cost (AVC), it would not be operating on any segment of its supply curve because it would shut down to minimize losses. The supply curve is relevant only when the firm is actively producing.

Graph 14-3 This Graph Depicts the Cost Structure of a Profit-Maximising