A perfectly competitive firm charges the market price of $18 to sell its product. The firm produces and sells the profit-maximizing quantity of 50 units at this price. Its average total cost is $17 and its average variable cost is $15. Which of the following statements is then true?
a. This firm should shut down now.
b. At this current level of production, the firm's marginal cost is $17.
c. At this current level of production, the firm's marginal cost is $15.
d. The firm is earning an economic profit of $50
Ans: d. The firm is earning an economic profit of $50
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In the figure above showing the costs and benefits of paper production, there is an
A) external cost associated with paper production. B) external benefit associated with paper production. C) external cost associated with paper consumption. D) external benefit associated with paper consumption.
Which of the following is not an example of nonprice competition in the airline market?
A. Increased frequency of flights. B. Advertising on the radio. C. A low concentration ratio. D. More on-time flights.