The graph above shows cost curves for a perfectly competitive firm.The firm will break even if price is:

Question

Quizplus · Accepted Answer

The firm will break even at the point where average total cost (ATC) equals price (P), which is at a quantity of 4 units. At this point, the ATC and average variable cost (AVC) are both equal to $3.90, which is the price needed for the firm to break even. At any price lower than $3.90, the firm will incur losses. Therefore, the best choice is B, which represents a price of $3.90.

The Graph Above Shows Cost Curves for a Perfectly Competitive