Figure 13-1
Suppose that a firm in a competitive market has the following cost curves:
-Refer to Figure 13-1.The firm will earn a negative economic profit but remain in business in the short run if the market price is

Question

Figure 13-1
Suppose that a firm in a competitive market has the following cost curves: 
-Refer to Figure 13-1.The firm will earn a negative economic profit but remain in business in the short run if the market price is

Quizplus · Accepted Answer

In the short run, a firm will continue to operate if the price covers the average variable costs, even if it incurs a loss, as long as the price is above the shutdown point but below the break-even point. Here, the price range between $4.50 and $6.30 indicates that the firm can cover its variable costs but not its total costs, leading to a negative economic profit.

Figure 13-1 Suppose That a Firm in a Competitive Market Has the Has