Suppose a perfectly competitive firm faces the following situation: P = $6; output = 2,000; ATC = $7; MC = $6; and AVC = $6.50. Which statement is an accurate description of the firm's situation?
A) The firm incurs a loss and is minimizing its loss.
B) The firm earns profit but is not maximizing its profit.
C) The firm is maximizing profit.
D) The firm incurs a loss but is not minimizing its loss.
Correct Answer:
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