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If P exceeds AVC but is smaller than AC at the best level of output, the firm is

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Question:

If P exceeds AVC but is smaller than AC at the best level of output, the firm is

A.

making a profit

B.

incurring a loss but should continue to produce in the short run

C.

incurring a loss and should stop producing immediately

D.

breaking even.

Answer» b. incurring a loss but should continue to produce in the short run

Note: The above multiple-choice question is for all general and Competitive Exams in India.