Figure 13-4

Figure 13-4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches.
-Refer to Figure 13-4.What is the area that represents the loss made by the firm?
A)the area P₀adP₃
B)the area P₁bcP₂
C)the area P₀acP₂
D)the area P₂cdP₃

Question

Figure 13-4
  
Figure 13-4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches.
-Refer to Figure 13-4.What is the area that represents the loss made by the firm?
A)the area P₀adP₃ 
B)the area P₁bcP₂ 
C)the area P₀acP₂ 
D)the area P₂cdP₃

Quizplus · Accepted Answer

The area P₂cdP₃ represents the loss made by the firm, as it is the area between the average total cost curve and the price level at which the firm is operating, below the break-even point.

Figure 13-4 Figure 13-4 Shows Short-Run Cost and Demand Curves for a and Demand