If ATC = $20, AVC = $12, MR = $15 and MC = $15, then the result for the perfectly competitive firm would be:
A) making a short-run loss.
B) making a short-run profit.
C) breaking even.
D) shutting down.

Question

Quizplus · Accepted Answer

The firm is making a short-run loss because the market price (MR = $15) is less than the average total cost (ATC = $20) but greater than the average variable cost (AVC = $12), indicating it covers its variable costs but not its total costs.