Narrbegin Exhibit 7.5 Short-run profit and loss
-According to Exhibit 7.5, if the price of the good is $17, then the result for the perfectly competitive firm will be:

Question

Narrbegin Exhibit 7.5 Short-run profit and loss  
-According to Exhibit 7.5, if the price of the good is $17, then the result for the perfectly competitive firm will be:

Quizplus · Accepted Answer

According to Exhibit 7.5, if the price of the good is $17, the total cost of producing 9 units of output is $200, while the total revenue is only $153. This implies that the firm is incurring a loss of $47 in the short run (i.e., total revenue is less than total variable cost). However, since the price ($17) is still above the average variable cost ($22.22), the firm will continue to produce in the short run, but with losses. In the long run, if the firm continues to make losses, it may eventually shut down.