In the Short Run, a Perfectly Competitive fiRm Is Minimizing

question 8

Multiple Choice

In the short run, a perfectly competitive firm is minimizing losses at an output of 250 units. If the market price is £5 and the average cost is £8 per unit, what is the firm's total loss?

• A) £750
• B) £2000
• C) £1250
• D) £400

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Definitions:

Slope

The slope is the measure of the steepness or incline of a line, typically described as the ratio of the rise over the run between two points on the line.

Isocost Line

A line that represents all combinations of inputs which have the same total cost.

Capital

Wealth in the form of money or other assets owned by a person or organization or available for purposes such as starting a company or investing.

Labor

Pertains to the utilization of human labor, encompassing both physical and intellectual efforts, in the creation of products and services.