Figure 13-4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches.
-Refer to Figure 13-4.What is the area that represents the loss made by the firm?
A)the area P0adP3
B)the area P1bcP2
C)the area P0acP2
D)the area P2cdP3

Question

Figure 13-4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches.
-Refer to Figure 13-4.What is the area that represents the loss made by the firm?
A)the area P0adP3 
B)the area P1bcP2 
C)the area P0acP2 
D)the area P2cdP3

Quizplus · Accepted Answer

The area P2cdP3 represents the loss made by the firm, as it is the area between the average total cost curve and the price level at which the firm is operating, below the break-even point.

Figure 13-4 Shows Short-Run Cost and Demand Curves for a Monopolistically