If a purely competitive firm's demand curve lies below its average total cost curve, the firm is:
A) breaking even.
B) sustaining a loss.
C) operating in the long run.
D) earning an economic profit.

Question

Quizplus · Accepted Answer

When a firm's demand curve lies below its average total cost curve, it means the price it can charge for its product is less than the average cost of producing that product, leading to a loss.

If a Purely Competitive Firm's Demand Curve Lies Below Its