If price is below average total cost but above average variable cost,the break-even level of output:
A) is greater than the profit-maximizing level of output.
B) is zero.
C) can't be calculated since losses will be earned at each level of output including the profit-maximizing level.
D) approaches infinity.
E) equals the profit-maximizing level of output.

Question

Quizplus · Accepted Answer

When price is below average total cost but above average variable cost, the firm incurs losses at all output levels, including the profit-maximizing level, making it impossible to calculate a break-even level of output.

If Price Is Below Average Total Cost but Above Average