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Grouping of Items in Statement of Profit and Loss

Under perfect...

Question

Under perfect competition, if the AR curve lies below the AC curve, the firm would _______.

A

make only normal profit

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B

incur losses

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C

make super normal profit

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D

firm cannot determine profit

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Solution

The correct option is D firm cannot determine profit
Under perfect competition, if average revenue curve is below the average cost curve then the firm will be incurring losses and the firm will not be able to determine the profit from the market.

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