Figure 16-10
The figure is drawn for a monopolistically-competitive firm.
-Refer to Figure 16-10. If the firm were to produce 154.92 units of output,
A)efficient scale would be realized.
B)ATC would be at its minimum value.
C)the firm would sustain a loss of more than $2,000.
D)All of the above are correct.

Question

Figure 16-10
The figure is drawn for a monopolistically-competitive firm. 
-Refer to Figure 16-10. If the firm were to produce 154.92 units of output,
A)efficient scale would be realized. 
B)ATC would be at its minimum value. 
C)the firm would sustain a loss of more than $2,000. 
D)All of the above are correct.

Quizplus · Accepted Answer

At 154.92 units of output, the firm would be producing at the point where its ATC is at its minimum value and where it is producing at its efficient scale. However, since the price (P) is below ATC at this level of output, the firm would sustain a loss of more than $2,000. Therefore, all of the options are correct.

Figure 16-10 The Figure Is Drawn for a Monopolistically-Competitive Firm