Flora's Flowers operates in a perfectly competitive market.At the point where marginal cost equals marginal revenue,ATC = $10,AVC = $5,and the price per unit is $7.50.In this situation,

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Flora earns negative profits because the price per unit ($7.50) is less than the ATC ($10), but since the price is above AVC ($5), Flora will continue to operate in the short run to cover variable costs.

Flora's Flowers Operates in a Perfectly Competitive Market