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Figure 11.3.1 Refer to Figure 11.3.1, which shows the cost curves and mar...

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A graph titled, price and cost (dollars per unit) versus quantity (units).The graph plots two convex curves and a horizontal line. The first convex curve that falls from top left to mid-bottom passes through (10, 12) and rises through mid-bottom to top right is labeled, A T C. The second convex curve that rises from bottom left to mid-top passes through (10, 12). The curve increases through mid-top to the top right is labeled M C. Both the curves intersect each other at point (10, 12). A horizontal line that starts from (0, 10) to (10, 10) is labeled M R.

Figure 11.3.1

Refer to Figure 11.3.1, which shows the cost curves and marginal revenue curve of a firm in a perfectly competitive industry. In the short run, which of the following events will occur?

The firm will

continue to produce and incur an economic loss if the market price exceeds average variable cost.

exit from the industry if the market price is greater than average variable cost.

make an economic profit.

break even.

raise the market price.

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