Figure 11-7
Figure 11-7 shows short-run cost and demand curves for a monopolistically competitive firm in the footwear market.
-Refer to Figure 11-7.Which of the following is the area that represents the profit or loss experienced by the firm?

Question

Figure 11-7
  Figure 11-7 shows short-run cost and demand curves for a monopolistically competitive firm in the footwear market.
-Refer to Figure 11-7.Which of the following is the area that represents the profit or loss experienced by the firm?

Quizplus · Accepted Answer

The area that represents the profit or loss experienced by the firm is a loss represented by the rectangle P₂uvP₁. This is because the area below the average variable cost curve and above the price line represents the firm's loss.

Figure 11-7 Figure 11-7 Shows Short-Run Cost and Demand Curves