Homework Answers
Answer :- Option D is correct Answer
A firm can incur lose when market price is less than Average Total Cost (ATC). If the price is less than ATC but greater than Average variable Cost (AVC), it means the market price covers all it's variable costs and some portion of fixed cost. In this situation the loss amount is a portion of fixed cost. So, the firm should continue production even at loss.
The profit maximizing quantity is at the = point where, P = MC.
Thus, the firm should continue to operate but produce more than 50 units
(Select Option D)
(Note : average variable cost is not clearly visible, but it looks like $1, therefore I've taken $1, if you have any doubts, kindly ask in comment section)
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9 suppose a perfect ly competitive firm: | minim un average variable cost is $1 When...
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