Figure 11.3

Figure 11.3 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches.
-Refer to Figure 11.3.What is the area that represents the loss made by the firm?

Question

Figure 11.3
  
Figure 11.3 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches.
-Refer to Figure 11.3.What is the area that represents the loss made by the firm?

Quizplus · Accepted Answer

The area P₂cdP₃ represents the loss made by the firm, as it is the area between the average total cost curve and the price level at which the firm is operating, indicating that costs exceed revenues.

Figure 11.3 Figure 11.3 Shows Short-Run Cost and Demand Curves for a and Demand