Question

b. A representative firm a. The industry МС ATC S AVC 9 7 6 5 D2 DI 10 12 13 15 0 0 Bushels of wheat Bushels of wheat Price pQ12.png

Refer to the figure above. In the $6-$7 price range, the firm will

Group of answer choices

a)shut down.

b)earn a profit

c)break even

d)continue to operate, but at a loss

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Answer #1

Ans: continue to operate, but at a loss.

Explanation:

As we know a firm can stay on business even at loss if the price covers it's AVC. So, from the graph it is seen that in the price range of $6 - $7, the price is less than ATC and greater than AVC. Therefore, the firm will continue to operate, but at a loss.

Thus, option [d] is correct answer.

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