-The above figure shows the cost curves for a competitive firm.The firm will incur economic losses if the price is less than
A) $0.
B) $5.
C) $10.
D) $11.

Question

-The above figure shows the cost curves for a competitive firm.The firm will incur economic losses if the price is less than
A) $0. 
B) $5. 
C) $10. 
D) $11.

Quizplus · Accepted Answer

A competitive firm incurs economic losses when the price is below its average total cost (ATC). Without the figure, we assume the ATC intersects the marginal cost (MC) curve at its minimum point, which typically represents the lowest price at which the firm can sell its product without incurring losses. If the ATC's minimum is at $10, any price below this would mean the firm is selling its product for less than the average cost of production, thus incurring losses.

-The Above Figure Shows the Cost Curves for a Competitive