The Figure Given Below Shows the Revenue and Cost Curves

The figure given below shows the revenue and cost curves of a perfectly competitive firm.Figure 10.5
MC: Marginal cost curve
MR: Marginal revenue curve.ATC: Average-total-cost curve
AVC: Average-variable-cost curve
-Since the beginning of the millennium, the United States has witnessed closure of many Internet start-up companies. According to the model of perfect competition, these companies must have shut down in the short run because:

A) the price they were charging was too high to attract customers.
B) the price they were charging was too low to provide sufficient revenues.
C) they were not earning enough revenue to cover their total costs.
D) they were not earning enough revenue to cover their total variable costs.
E) they were not earning enough revenue to cover their total fixed costs.

Correct Answer:

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