The diagram above shows a monopolistically competitive firm in the long run. Answer the questions below.    Using the points displayed on the diagram, name the rectangular area that represents the profit or loss.  What should the firm do regarding price and/or quantity to minimize its losses?

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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The diagram above shows a monopolistically competitive firm in the long run. Answer the questions below. 

 

  1. Using the points displayed on the diagram, name the rectangular area that represents the profit or loss. 
  2. What should the firm do regarding price and/or quantity to minimize its losses? 
$Price/cost per unit
P4
P3
P2
P1
0
Q1
MR
MC
ATC
AVC
Demand
Quantity
Transcribed Image Text:$Price/cost per unit P4 P3 P2 P1 0 Q1 MR MC ATC AVC Demand Quantity
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