Figure 13-7 Shows Short-Run Cost and Demand Curves for a Monopolistically

Multiple Choice

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 Qy units and charging a price of P0.
C) The firm should minimize its losses by producing Qy units and charging a price of P2.
D) The firm should minimize its losses by producing Qy units and charging a price of P1.