Exploring Economics
8th Edition
ISBN: 9781544336329
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
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Transcribed Image Text:The figure to the right shows short-run cost and demand curves for a
monopolistically competitive firm in the footwear market.
Which of the following statements describes the best course of action for the firm
depicted in the diagram?
○ A. The firm should minimize its losses by producing Q, units and charging a
price of Po
B. The firm should exit the industry because its price is less than its
average total cost.
OC. The firm should minimize its losses by producing Q, units and charging a
price of P1-
OD. The firm should minimize its losses by producing Q, units and charging a
price of P2
Costs and
revenue
69
$
W
Po
MC
ATC
AVC
Demand
MR
0
Quantity
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