The figure above shows a firm's demand and marginal revenue curves and its cost curves.
-As long as the firm illustrated above remains open,it will set a price of ________ per month and it will ________.

Question

Quizplus · Accepted Answer

DBoth B and D are correct because, without specific details from the illustration, we can infer that if a firm decides to remain open, it must cover its variable costs in the short run. If it sets a price at either $50 or $40 and continues to operate, it could either make an economic profit or incur an economic loss depending on whether the price covers average total costs. However, without specific cost and revenue details, both scenarios are plausible. The firm would not operate at a loss in the long run, so these options reflect short-term decisions.

The Figure Above Shows a Firm's Demand and Marginal Revenue