At an output level of 100 units, TC = $1000, TVC = $500, MC = $3 and MR = $3, the short-run result/s for the perfectly competitive firm will be:
A) making a short-run loss of $500.
B) breaking even, as MC = MR.
C) shutting down and incurring a loss of $1000.
D) making a loss of $1000 but continuing to operate.

Question

Quizplus · Accepted Answer

The firm is making a loss because total cost ($1000) is greater than total revenue ($300), resulting in a loss of $700. However, since the firm is covering its variable costs ($500), it will continue to operate in the short run to minimize losses.

At an Output Level of 100 Units, TC = $1000