When a profit-maximizing competitive firm finds itself minimizing losses because it is unable to earn a positive profit, this task is accomplished by producing the quantity at which price is equal to
A)sunk cost.
B)average fixed cost.
C)average variable cost.
D)marginal cost.

Question

Quizplus · Accepted Answer

In a competitive market, a firm minimizes losses by producing where price equals marginal cost, as this is the point where the firm covers its variable costs and contributes to fixed costs, minimizing losses.

When a Profit-Maximizing Competitive Firm Finds Itself Minimizing Losses Because