Figure 14-2
The figure below depicts the cost structure of a profit-maximizing firm in a competitive market.

-Refer to Figure 14-2.If the firm is in a short-run position where P

Question

Figure 14-2
The figure below depicts the cost structure of a profit-maximizing firm in a competitive market.
 
-Refer to Figure 14-2.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

If P < AVC, the firm will shut down in the short run, meaning it will not produce any output. This corresponds to the segment of the supply curve where the firm is not producing, which is segment AB.

Figure 14-2 The Figure Below Depicts the Cost Structure of a Profit-Maximizing