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The following figure shows the total cost and total revenue curves for a firm.
Figure 9-2
-Refer to Figure 9-2.At which of the following output levels is the firm incurring its highest loss?
A)1 unit
B)2 units
C)3 units
D)4 units

Question

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The following figure shows the total cost and total revenue curves for a firm.
Figure 9-2 
-Refer to Figure 9-2.At which of the following output levels is the firm incurring its highest loss?
A)1 unit 
B)2 units 
C)3 units 
D)4 units

Quizplus · Accepted Answer

The firm incurs its highest loss at the output level where the difference between total cost and total revenue is greatest. Without the figure, we assume that at 1 unit, the loss is highest based on typical cost structures.

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