Figure 13-7 Figure 13-7 Shows Short-Run Cost and Demand

Multiple Choice

Figure 13-7 Figure 13-7 shows short-run cost and demand curves for a monopolistically competitive firm in the footwear market.
-Refer to Figure 13-7. Which of the following statements describes the best course of action for the firm depicted in the diagram?

A) The firm should exit the industry because its price is less than its average total cost.
B) The firm should minimize its losses by producing Q_y units and charging a price of P₀.
C) The firm should minimize its losses by producing Q_y units and charging a price of P₂.
D) The firm should minimize its losses by producing Q_y units and charging a price of P₁.