Question

The market for fertilizer is perfectly competitive. Firms in the market are producing output but are currently making economic losses. Which of the following statements is true about the price of fertilizer? Check all that apply. The price of fertilizer must be greater than average total cost. The price of fertilizer must be greater than average variable cost. The price of fertilizer must be greater than marginal cost.

Answer 1

The price of fertilizer must be greater than average variable cost.

Step-by-step explanation:

• Being a perfectly competitive market the prices of the fertilizers will rise. As the forms are making economic losses the prices must be greater the average variable costs.