(Figure: Prices,Cost Curves,and Profits) Use Figure: Prices,Cost Curves,and Profits.If the price is P₁and the firm decides to produce at output Q₁,then the firm earns:

A) a loss equal to (ba) × Q_1.
B) a loss equal to (ca) × Q_1.
C) a loss equal to (bc) × Q₁.
D) zero.

Question

Valerie Givens · Accepted Answer

Final Answer : B, Explanation :  At output Q 1 , the firm's total cost is greater than the revenue it generates at the given price, resulting in a loss. The loss would be equal to the vertical distance between the average total cost curve (point c) and the price line (point a), multiplied by the quantity produced (Q 1 ). Therefore, the correct answer is option B, which is the formula for this loss: (ca)× Q 1. .

(Figure: Prices,Cost Curves,and Profits) Use Figure: Prices,Cost Curves,and Profits.If the price is P₁and the firm decides to produce at output Q₁,then the firm earns:

A) a loss equal to (ba) × Q_1.
B) a loss equal to (ca) × Q_1.
C) a loss equal to (bc) × Q₁.
D) zero.

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Learning Objectives

Learning Objectives

Related questions

(Figure: Prices,Cost Curves,and Profits) Use Figure: Prices,Cost Curves,and Profits.If the price is P1 and the firm decides to produce at output Q1,then the firm earns:A) a loss equal to (ba) × Q1.B) a loss equal to (ca) × Q1.C) a loss equal to (bc) × Q1.D) zero.

Definitions

Learning Objectives

Learning Objectives

Related questions

(Figure: Prices,Cost Curves,and Profits) Use Figure: Prices,Cost Curves,and Profits.If the price is P₁and the firm decides to produce at output Q₁,then the firm earns:

A) a loss equal to (ba) × Q_1.
B) a loss equal to (ca) × Q_1.
C) a loss equal to (bc) × Q₁.
D) zero.