Figure 11-4
Figure 11-4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches.
-Refer to Figure 11-4.Should the firm represented in the diagram continue to stay in business despite its losses?

Question

Figure 11-4
  Figure 11-4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches.
-Refer to Figure 11-4.Should the firm represented in the diagram continue to stay in business despite its losses?

Quizplus · Accepted Answer

If the firm's total revenue covers its variable costs, it should continue operating in the short run, as it can cover its variable costs and contribute something towards fixed costs.

Figure 11-4 Figure 11-4 Shows Short-Run Cost and Demand Curves