The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7

-When a perfectly competitive firm's demand curve lies above its average total cost curve, the firm incurs an economic loss at that level of output.

Question

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7
 
-When a perfectly competitive firm's demand curve lies above its average total cost curve, the firm incurs an economic loss at that level of output.

Quizplus · Accepted Answer

When a perfectly competitive firm's demand curve lies above its average total cost curve, it means the price (determined by the demand curve) is higher than the average total cost of production, indicating the firm is making an economic profit, not incurring a loss.

The Figure Given Below Shows the Aggregate Demand and Supply