For a perfectly competitive syrup producer whose average total cost curve does not change,an economic profit could turn into an economic loss if the
A) market demand for syrup decreases.
B) marginal cost curve shifts downward.
C) market demand for syrup does not change.
D) market demand for syrup increases.
E) price of syrup rises.

Question

Quizplus · Accepted Answer

If the market demand for syrup decreases, the price of syrup will fall and the producer will have to sell at a lower price. This will reduce the revenue of the producer, and if the revenue falls below the average total cost, the producer will incur losses.

For a Perfectly Competitive Syrup Producer Whose Average Total Cost