Figure 12-7 Figure 12-7 Illustrates the Cost Curves of a Perfectly Competitive

Figure 12-7

Figure 12-7 illustrates the cost curves of a perfectly competitive firm.
-Refer to Figure 12-7.If the market price is P₁,

A) the firm will experience a loss and raise its price to P₂. The firm will then break even.
B) the firm will break even by producing a quantity of Q₂.
C) the firm will experience a loss since price is less than ATC.
D) the firm may make a profit if it can increase the demand for its product.