The diagram illustrates the average fixed cost (AFC), average variable cost (AVC) and average total cost (ATC) curves confronting three firms X, Y and Z. DX, DY and DZ are the three corresponding demand curves. Each of the three firms aims to earn a profit. Which statement is not correct?
- AFirm X will choose not to produce at all.
- BFirm Y is likely to operate in the long run but not in the short run.
- CFirm Y is likely to operate in the short run but not in the long run.
- DFirm Z will operate in both the short run and the long run.