The diagram illustrates the costs and revenues of a firm producing output Qe at a price of Pe. What could account for this?
- AThe firm is deliberately selling below cost to keep out potential entrants.
- BThe firm wants to maximise the volume of sales to gain economies of scale.
- CThe managers’ salaries are related to revenue rather than to profits.
- DThe managers want to have a large team working for them to increase their status.