Figure 13-7

Figure 13-7 shows short-run cost and demand curves for a monopolistically competitive firm in the footwear market.
-Refer to Figure 13-7.Which of the following is the area that represents the profit or loss experienced by the firm?
A)A loss represented by the rectangle P₂uvP₁.
B)A loss represented by the rectangle P₂uwP₀.
C)A loss represented by the rectangle P₁vwP₀.
D)An accounting profit equal to P₁vwP₀.

Question

Figure 13-7
  
Figure 13-7 shows short-run cost and demand curves for a monopolistically competitive firm in the footwear market.
-Refer to Figure 13-7.Which of the following is the area that represents the profit or loss experienced by the firm?
A)A loss represented by the rectangle P₂uvP₁. 
B)A loss represented by the rectangle P₂uwP₀. 
C)A loss represented by the rectangle P₁vwP₀. 
D)An accounting profit equal to P₁vwP₀.

Quizplus · Accepted Answer

The area below the demand curve and above the supply curve represents the profit or loss experienced by the firm. In this case, the area P₂uvP₁ represents a loss.

Figure 13-7 Figure 13-7 Shows Short-Run Cost and Demand Curves for a and Demand